Public Bill Committee

[Mr David Amess in the Chair]

Clause 3  - Contracts covered by this Chapter

Stella Creasy: I beg to move amendment 2, in clause3,page3,line1,at end insert—
‘(e) financial services contracts which contain a bill of sale agreement regarding the ownership of goods.’.
Welcome, Mr Amess, to our Committee. We had fun this morning and we hope to have even more under your jurisdiction this afternoon. I accept that my definition of fun might not be shared by everyone.
We want to discuss a particular form of contract that we want to ensure is covered by the legislation, because it seems to be an anomaly. Hon. Members will be aware of my predilections regarding high-cost credit and my concern about some credit licensing agreements affecting people in our communities. I welcome the Government’s movement on the issue, so that there will now be a cap on the cost of credit.
However, there is one type of credit, of which Members may not be aware, called a logbook loan, which is underpinned by an agreement called a bill of sale. The amendment addresses problems with bills of sale and seeks to ensure that the Bill covers bill of sale agreements. I want to set out our concern about bills of sale and how they relates to logbook loans. I want to persuade the Committee that it is important that they are covered by this form of consumer protection. I will also alert the Committee to further amendments that we have tabled to deal with other aspects of those loans.
A logbook loan is a loan secured against a vehicle. The logbook for the vehicle is given to the lender as an asset against which the loan is made. That means that the organisation that offers the loan essentially owns the vehicle. A bill of sale is often used to underpin the contract. The loans are made at high rates of interest. As I said, I welcome the fact that the Government are going to legislate for a cap on the cost of credit, which will affect those loans. I am hoping to see confirmation of that from the Financial Conduct Authority.
Logbook loans are often made to people in severe financial difficulty, whose car is the only asset against which they can raise a loan. A logbook loan based on a bill of sale is a particularly egregious piece of consumer credit, because of how a bill of sale operates. Bills of sale are an anachronism. The nature of such contracts goes back to the Victorian era, if not earlier. That they are used for logbook loans compounds the difficulties that many borrowers have, because they do not come with modern consumer protection.
We have already talked about how the Bill will simplify and codify existing pieces of consumer legislation. Bills of sale and the laws on which they are based predate that existing legislation. Without the amendment to clarify that the Bill covers that form of contract, the archaic bill of sale will remain. A bill of sale will cover the transfer or purchase but will not offer simple protections, for instances when the borrower cannot repay the loan. The lender will be able to repossess the vehicle without recourse to a court. They will not have to give the details to insurance companies.
A number of people sell on cars with a bill of sale agreement—and, therefore, a debt—attached to them. The buyer of the second-hand car does not know that there is a debt attached to the vehicle and will then find the car repossessed. Often people who have taken out logbook loans sell their cars as a way of trying to get money to pay back those high-cost forms of credit.
The person who buys the car is unaware of the debt and finds the car repossessed because the ownership of the vehicle remains, through the bill of sale, with the person giving the loan, rather than, as one might expect when buying the car in good faith, with the person who has bought it. We have tabled an amendment to a later clause address that issue of whether it is fair for someone to buy a vehicle or piece of property and not know about any outstanding costs or charges related to the asset.
With amendment 2, we want to bring bill of sale contracts under the auspices of consumer protection legislation, thereby ensuring that people have access to the measures that the Bill offers. I shall give the Committee some examples of the kinds of problems that people get into with logbook loans and show why addressing bill of sale issues is so important.
I see logbook loans in my constituency. I am sure others see them in their communities as well, when people in financial difficulty with such products come to them. Rather than give the impression that the problem is only in Walthamstow, as it might appear when I talk about the problems of high-cost credit, I shall give national examples from Citizens Advice. A citizens advice bureau saw a 26-year-old man on jobseeker’s allowance who lived with his parents and had taken out a logbook loan of £1,500. The man already had debt issues, including a magistrates court fine of more than £300. The logbook loan was taken out to cover those other debts, but he had no means to repay the loan and was worried that he would lose his car.
Under a bill of sale agreement, that person does not have the same protection for that asset that he would have had if he had taken out a payday loan, which comes under modern consumer protection law. We estimate that one in four second-hand cars in this country are sold with such a charge against them, but people would not know about it, and due to the bill of sale agreement they would have no recourse to the courts to challenge the repossession of a vehicle that they bought in good faith.
People are being lent money without the protection of existing financial services laws. For example, if someone is given a loan that they cannot afford to repay, they have the opportunity to negotiate a repayment scheme. We do not see that with logbook loans. If the gentleman I mentioned had borrowed £1,500, and paid £55 a week for 78 weeks with an average annual percentage rate of 400%, which is typical for a logbook loan, he would have paid back £4,250 in total—that is more than £2,750 in interest to borrow £1,500.
The sums are astronomical. A cap on the cost of credit should begin to deal with the cost of such loans, but the issue today is their egregious terms. The amendment seeks to ensure that bill of sale agreements are accountable, in the same way that other forms of consumer credit are. However egregious we might consider those other forms of interest, we argue that logbook loan agreements should be subject to the same protections on debt repayments, the courts, fair lending and other modern forms of consumer protection. One must wonder why lenders continue to use bill of sale agreements for such logbook loans when they offer such detriment to consumers. One can only conclude that it is because they are so preferential to the trader. In a modern consumer framework, it is not right to allow such provisions to remain.
I hope the Committee agrees that it is not contentious to want to ensure that all contracts in the UK are covered by modern consumer protection. A number of stakeholders would certainly support it. Citizens Advice sees a huge amount of complaints about such loans and, unsurprisingly given the current financial crisis, has seen what was a declining market rocket back up again, although not on the scale of payday lending or pawnbroking. Its survey showed that 394 logbook loans were reported to it, and found
“evidence of irresponsible lending, poor practice when dealing with customers in financial difficulty, high default charges, irresponsible debt collection and repossession practices”,
as well as instances of people buying cars that were subject to loans of which they were not aware. We are trying to separate people who might unknowingly buy a car with a logbook loan charge against it from the practice of offering logbook loans with a bill of sale attached in the first place. Citizens Advice says:
“We want to see protection for borrowers from unscrupulous lending and repossession tactics, as well as protection for people who unwittingly buy a car subject to a logbook loan.”
As with payday lending, I know that Government Members might argue, “Hang on a minute, these loans have been around for ever and bills of sale have been around for ever, so why didn’t the previous Administration do something about it?” They were trying to. In 2009, the previous Government launched a consultation with a range of options for dealing with such companies. It looked at reforming or abolishing bill of sale agreements. The consultation reported back in 2010. Unsurprisingly, the industry was against that. Why would turkeys vote for Christmas? That is the question I always want to ask some of these companies.
I note that a year later, the Government decided that it was better to look for self-regulation of how contracts were applied to the logbook loan industry. I simply point out that the view taken about payday lending and high-cost credit to begin with was that to intervene to try to tackle some of the practices that existed would be counter-productive. That the whole House has moved on this issue seems to be a compelling argument for including bills of sale in our legislative update.

Mary Glindon: Specifically on what my hon. Friend was saying about the Government’s response to the consultation, the Government argue that it would be disproportionate to ban the industry because of a few rogue lenders. Does she agree that in 2010 the Office of Fair Trading reported that more than 1,000 consumers had complained about the problems with logbook loans and claimed losses totalling £1.47 million? Does she think it would be disproportionate to ban bills of sale given those kinds of figures?

Stella Creasy: My hon. Friend is right. The House has moved on in how we deal with the high-cost credit market. We all recognise now that this market has a series of behaviours in it that are detrimental to consumers and therefore detrimental to our economy. It seems to us that logbook loans will be the last vestiges of that unreformed market. It is right to examine what we can do to protect consumers who take out such agreements. I want to explain to the Committee just how it works.
The Bills of Sale Act (1878) Amendment Act 1882 only requires a creditor to serve a valid default notice before taking action, which means that there is only a minor delay in taking possession for what could be a minor breach of the agreement such as a day’s delay in repayment. That is a huge amount of pressure to place on consumers, and it is not fair pressure, especially for people who are already in financial difficulty. I do not think any of us would counsel our constituents to take out a logbook loan were they short of cash, even if they had a car. We might suggest that they sell the car, but when we looked at the terms of those loans we would not think that they were a positive, constructive thing for someone in financial difficulty.
The fact that we have a particular type of contract against which such loans are based, which allows draconian measures to be taken, further compounds the difficulties that they create. As StepChange, the debt counselling charity points out, such loans are
“a major driver of bad practice. Repossession or the threat of repossession of a good leaves financially vulnerable customers open to abuse by creditors. The lack of any effective control on creditor behaviour creates a significant imbalance in power between parties that is inherently unfair to borrowers.”
Although such loans have been around for a very long time, the industry has grown greatly, and the practices that it has undertaken by using consumer credits of the type that I have described have expanded rapidly because of the growth of the high-cost credit market in this country. Where once logbook loans were a relatively minor part of a deal, we now see logbook loan stores. I know that the Minister has one in her own patch called Loans2Go, and in other shops we see logbook loans being offered as part of a portfolio of high-cost credit. Those loans will be addressed by a cap on the cost of credit, but the contracts that underpin them, the threat of repossession and the threat of action at such short notice without recourse to a judge or an independent advocate will remain unless we ensure that these contracts are brought under the auspices of modern consumer protection.
I hope that Government Members will see that this is not a deliberate attempt to leave a gap for high-cost credit to persist in this country and unscrupulous practices to persist, but is more a recognition that an arcane piece of legislation—the 1882 Act needs to go or at least be brought under consumer protection. If the Bill is intended to simplify people’s rights, surely we should be able to tell people that whenever they take out a loan, for whatever purpose, and whatever the rate of interest, there are some basic principles of protection against mis-selling, egregious practice and repossession without independent scrutiny. I hope that Government Members will support us in that.
I know that other Members will have seen the effect of logbook loan companies in their constituencies. They will have encountered people who are frightened to open their door. I have to do a distinctive knock on the door sometimes in my community to make it clear to people that I am not the bailiff coming. That is a reflection of certain companies’ practices.
I also wish to draw the Committee’s attention to clauses later in the Bill that relate to the practice of buying a car with a loan outstanding against it, which is permitted under the 1882 Act. Some Government Members care about high-cost loans and have spoken out against payday lenders, and I urge them to see that issue in the same vein.
Bills of sale enable further bad practice on top of the cost of the credit that is provided. Our problem with clause 17 is about what will be done for a consumer who bought a car in good faith and did not know that there was a debt outstanding on it. Surely they deserve our protection, as do those who are in financial difficulty and find that a logbook loan is all that they can get. We can all argue about whether we should have more credit unions, but if people have a car as an asset and take out a logbook loan, it is fair that they expect to get reasonable protection.

Andrew McDonald: My hon. Friend is making an excellent speech and setting out her case extremely well. Is the other side of the coin not the resulting lack of confidence in the market? There is enough trouble in second-hand car sales without this problem persisting. Is this not the opportunity to tackle that head on?

Stella Creasy: My hon. Friend makes a strong point. Second-hand car sales might, in fact, be the biggest source of complaints to groups such as Citizens Advice and Which?. Those who were in the Delegated Legislation Committee on Monday will know that I wagered that, in a pub on a Friday night, in a debate about a politician versus an estate agent, people’s idea of our reputations would probably be even stevens. Second-hand car dealers may also come into the frame when we are thinking about those about whom we might want to say, “Have a pint with them and see whether you think they are a person worth talking to.” The industry obviously has a problem. There are some good second-hand car sales groups, but there is also some sharp practice.
People who buy cars under hire purchase agreements, which are distinctive from bill of sale agreements, have different forms of protection. I will set those out to allow the Committee to understand the point we are trying to make with the amendment and why bill of sale agreements should come under modern consumer protection law. If someone buys a car through hire purchase, that is covered by the Hire Purchase Act 1964, and therefore by clause 3. It is stated that a goods title can pass to an innocent purchaser, but that does not apply to bills of sale.
Current sale of goods laws, including section 24 of the Sale of Goods Act 1979, contain provision that where a person sells a good but remains in possession of it and subsequently sells it on to a third party, the third party can take title to the good if it was purchased in good faith. That provision is similar to that found in the 1964 Act, but it does not apply to a bill of sale agreement. Therefore, even if someone buys a car that has an outstanding bill of sale agreement against it from a seemingly reputable second-hand car salesperson and says that they were not aware of the agreement, that will be no defence against repossession.
The existing bill of sale agreements therefore create huge vulnerability for people buying cars. We would like to see such agreements abolished, but, in the absence of that, we would like to include such sales under the auspices of the Bill. The amendment would offer immediate protection for both the consumers taking out those loans and those who find that they have bought a car with a bill of sale charge against it.
I hope that Members of all parties will support the amendment or, at least, that the Minister will offer us a way in which we can ensure that that particularly arcane form of contract is covered by modern consumer protection laws. Consumers, who may well end up paying a lower cost of credit on such loans in the future, would therefore get similar forms of protection were they not able to maintain their repayments. People who unknowingly bought a car with a debt outstanding on it would also be protected. I look forward to the Minister’s response.

Sheila Gilmore: I seek some guidance, Mr Amess. I wanted to make some comments in relation to the definitions in Scottish law. Should I do that now, or will there be a clause stand part debate?

David Amess: We are considering the amendment first, but I was going to allow a stand part debate.

Sheila Gilmore: Right, thank you. I want to say something about the amendment, and I will come to my other points later.
We have an opportunity to reform consumer law, so it is important to update it and bring it into the 21st century. Bills of sale and logbook loans are an old-fashioned way of dealing with matters. On Second Reading there was a suggestion that if we keep adding more and more to the Bill, it will become an omnibus Bill—too big and unwieldy. However, if things need to be done and things need to be changed, that is what legislation is for. We should not aim simply to have as neat and small a piece of legislation as we can get, even if it leaves things hanging off the end, so the Bill provides a good opportunity to look again at this issue.
Scots law differs, because such contracts are not recognised in Scotland, but having talked to some of my colleagues in the rest of the UK, I know that they are a problem. They might become a bigger issue as people become conscious of them. The companies involved are keen to encourage people to come to them by saying that they are not payday lenders. They claim to have lower interest rates, which they might well in some circumstances. They can have lower interest rates because they have the car as security, but there is a clearly a downside to that.
The companies’ advertising now claims that they can supply loans in a way that will not affect someone’s credit history, because the loan does not go through some of the same processes as others. The advertising says, “Come to us, rather than going to somebody else. It will not affect your credit history, and if you apply for a mortgage or whatever in future, you will be unaffected.” It therefore might become an increasingly common form of borrowing.
I have had a quick look at some of the online advertising. The bit about “We can take your car away” is in pretty small print or tucked away. It is certainly not on the front page with the advantages. In one case, I could not find it at all. In another, I found it tucked in under the FAQ section, but I think there should be a big warning about the implications of default. It certainly is not clear from the advertising, which stresses the ease of the loan, the interest rates, and the fact that people can get the money within an hour, which is always attractive for people who are in a panic.
In that context, such a loan is appealing. The advertising specifically says that the company will lend to people who have a bad credit history, so such loans attract people who have already had problems with credit, who have had financial difficulties, or who are in a desperate situation and think that it is a way of getting themselves out of it. They do not realise, as perhaps they should, that there is a downside. It would be helpful for us to make room in the Bill for something as important as this, and I am interested to hear the Minister’s view on that.

Jennifer Willott: Across Government we share the concern of the hon. Member for Walthamstow to protect consumers entering financing agreements that involve goods. No doubt we all have examples from our constituencies—the hon. Lady mentioned Loans 2 Go, and there is a branch round the corner from where I live; I see it all the time. This is an issue in many constituencies, particularly those with urban communities where these lenders tend to be focused.
I will come to the specifics of the amendment in a second. First, I will describe how the Bill will help to protect consumers where a trader supplies goods to them, which is tied up in this. The goods must meet the quality standards and the consumer has appropriate remedies if they do not—we have already discussed this and I am sure we will come back to it throughout the Bill—and those protections apply to goods regardless of the method of payment, so they apply to goods supplied under a finance agreement, as well as goods that are simply purchased for cash. What the Bill covers is quite broad.
Clearly logbook loans are an issue in our communities. I know that the hon. Lady has worked on these matters for a number of years and has done some really sterling work on it. It is probably also fair to say that people who access logbook loans are often among the most vulnerable in our society, because for many it is the only legitimate way that they can access credit. It is important that we bear that in mind when we look at the protection we can give those people, to make sure that we take into account the particular vulnerabilities that they may well have.
As hon. Members will be aware, responsibility for consumer credit regulation will transfer from the Office of Fair Trading to the Financial Conduct Authority on 1 April. The FCA will focus its resources on the areas of consumer credit regulation that are most likely to cause consumer harm, and that specifically includes logbook loans. There is consensus that there is a problem there, which is why the previous Government started a consultation in 2009, as the hon. Lady mentioned. There have been a lot of complaints about it over the years and there is clearly an issue of consumer detriment in terms of the amount of money that people complain they have lost.
The FCA will police the gateway to the consumer credit market much more thoroughly than is done under the current regime. Firms that pose the greatest risk to consumers, such as logbook lenders, will be among the first to require full authorisation by the FCA. Logbook loans will be defined by the FCA as high-risk activities, and as such the lenders will face closer supervision and higher regulatory costs to make sure that they are properly policed. Logbook loan providers will be required to meet the standards that the FCA expects of lenders, including making affordability checks and providing adequate pre-contractual explanations to consumers as well. For the first time, the FCA rules will be binding on lenders, so the FCA has a wide enforcement toolkit to take action if those rules are breached, and because those rules are binding, the FCA will be able to take action if they are breached. So consumers will be far better protected under the new regime from 1 April.
I hope that allays some of the concerns that hon. Members have about protecting some really vulnerable people. The FCA will monitor the market, and if it finds that there are further problems, it has been made very clear that it will not hesitate to take robust action. However, we are hopeful that this approach, with much tougher enforcement, may make a difference to consumers’ experience.
As for some of the other issues mentioned, the hon. Member for Edinburgh East referred to small print and how difficult it is for consumers to understand exactly what they are signing up to. That would be covered by the unfair terms element in this legislation—the rules around making sure that things have to be prominent and transparent and to be assessable in court for fairness and so on.

Sheila Gilmore: Without wishing to pre-empt the provisions around unfair terms, clearly there have been provisions in the law about unfair contract terms for some considerable time, yet this still continues. Perhaps the Minister will explain why she thinks the Bill will improve on this.

Jennifer Willott: I am saying that there is a different enforcement regime coming in on 1 April with the Financial Conduct Authority. After the consultation in 2009, a voluntary code of practice was established. Of the reputable lenders—and there are some reputable ones—the vast majority signed up to the code of practice. What is different is how it is being enforced and the fact that these types of lender are counted as high risk, so they will be among the first to go through the full authorisation process. The FCA has a much tougher regime to take action against those organisations that do not comply with the rules. If that does not work, it will consider further measures. However, it is hoped that having a tough regime and that authorisation process will make a difference.

Andrew McDonald: Should we not prevent the regime’s not working by including the amendment, and then we would get the best of all worlds? There seems to be doubt in the Minister’s mind about whether the FCA’s regime will be effective, but perhaps I misunderstood.

Jennifer Willott: No, I do not have any doubt. The code will be tightly enforced; it is not voluntary and it will be legally binding on the companies providing logbook loans. There will be a different regime in place to ensure that people are protected. There are problems with banning the practice outright. The individuals affected are very vulnerable, and evidence received by the previous Government’s consultation suggested that, if one of the last legitimate routes to credit were removed, more people may be forced into taking out loans with loan sharks. There are concerns that it may be slightly counter-productive. The FCA has made it clear that a priority will be to ensure that the system works much better, with the people making these loans being properly authorised and tightly regulated. We hope that will take out a lot of the rogue elements in the sector.
Another issue is the protection of people buying second-hand cars while not being aware of a charge on them. That situation is covered by clause 17. Rather than rehearse the arguments now, if you are amenable, Mr Amess, I would like to reserve that debate until we reach that clause. The matter raised by the hon. Member for Walthamstow and others will be covered by that clause.

Stella Creasy: I thank the Minister for her reply and acknowledgment that there is a problem here. I think she slightly got the wrong end of the stick regarding bill of sale agreements. I cannot let her get away with what I call the minimum wage myth. She may smirk but this is an important point. The industry around high-cost credit argued for years that if anyone tried to deal with the price they charged for credit, they would be driven out of business. There is no evidence for that—in fact, the evidence is to the contrary: in countries that have caps on the cost of credit, there are lower levels of illegal lending and personal debt. There is recognition of that evidence.
 The Lord Commissioner of Her Majesty's Treasury (Mr Sam Gyimah)  indicated dissent.

Stella Creasy: I see the Whip shaking his head but his Government’s policy is now to have a cap on the cost of credit. Perhaps he should have a word with the Chancellor, who has agreed with that evidence.
The idea that reforming what could be charged for high-cost credit would somehow drive people out is flawed. We are not talking about ending logbook loans. The amendment is about bill of sale agreements, and that is what I want the Minister to clarify. It is no good just saying it is for the FCA. I have worked closely with the FCA on its regulatory powers and it is going to do some good and important things, but if it is legal to remove somebody’s car without recourse to other, more modern, forms of consumer protection, such as going to court, lenders will continue to use that method and the FCA will not be able to act because it will still be a legal activity. Lenders will be able to use that pressure on people.

Jennifer Willott: The hon. Lady will be aware that the reason I was talking about logbook loans was that that exact subject had been raised. It is slightly disingenuous to suggest that it was not. We are not discussing the cap, because that is an issue of consumer credit and, as the hon. Lady said, the Government are acting on that. Many of the concerns relate to consumer credit and the way it is enforced through the FCA, but that is not a matter for this Bill. Those elements that are relevant, such as unfair terms and clarity of ownership of goods before sale, are covered elsewhere in the Bill and we will debate them later.

Stella Creasy: I agree with the Minister. I said that clause 17 would be where we discussed somebody unknowingly buying goods with a charge on them. Clause 3 sets out the kinds of contracts to which the consumer protections will apply, but the Minister must be clear about how the Bill will cover bill of sale agreements. Subsection (3) states:
“It does not apply…to a contract intended to operate as a mortgage, pledge, charge or other security”.
It therefore leaves a gap in which bill of sale agreements, which are about the ownership of a good as an asset against which a loan is secured, are open for continued exploitation.
We can argue about how to ensure that people have access to alternative sources of credit, although I agree with the Minister that the Bill does not deal with that. However, it does cover contracts offered for goods, and a bill of sale agreement is a contract offered for goods. Our amendment seeks clarity. If the Minister is going to say on the record that bill of sale agreements are explicitly covered, she must clarify why there are exceptions in subsection (3). We all recognise that these organisations have a lot of money and lawyers, and if there is any opacity they will continue to offer bill of sale agreements.

Jennifer Willott: My understanding of how the Bill relates to bills of sale is that the provisions would apply when a consumer’s car transfers back to the consumer when the loan is paid off, because that transfer is from the trader to the consumer. However, if the consumer agrees to transfer their car to the trader, that is not a supply of goods from a trader to a consumer, so it would not be covered.

Stella Creasy: So in fact the Bill will not cover bill of sale agreements. It is therefore possible that those kinds of contracts will continue. Is that what the Minister is suggesting?

Jennifer Willott: Clearly, the terms of the contract will be covered by the unfair terms provisions, which cover issues such as the small print, the consumer’s understanding and the prominence and transparency requirements. The contract element would therefore be covered by legislation. The transfer of goods, as defined at the beginning, is the transfer of the car back to the consumer and would be covered because it is transferred from the trader to the consumer. That is how that example relates to the clause, which specifically addresses the transfer of goods, rather than the contract terms.

Stella Creasy: The Minister is carefully ignoring the first part of the equation, which is when the owner of the good, the consumer, chooses to transfer ownership of the property to the trader, the lender, to facilitate the loan. We seek to include that transfer and that contract in the Bill. We cannot allow bills of sale to avoid all other forms of modern consumer protection.
I appreciate that the Minister recognises that there is a problem with the way in which bill of sale agreements are used. Our amendment is designed to ensure that they fall within the scope of the Bill. The Minister has not yet satisfied me that she will ensure that traders cannot say, “I will give you a loan, but the quid pro quo is that you give me ownership of your vehicle and I will be able to reclaim that vehicle at any time without any recourse to the traditional forms of consumer protection.” That is what we are trying to do.

Jennifer Willott: But that transfer would be covered with the FCA’s requirements. The lender would have to go through the authorisation gateway and would have to be signed up to the legally binding code of practice. Those consumer credit protections would cover that contract. However, the example of an individual who transfers ownership of their car to a trader, as we discussed this morning ad nauseam, is about the relationship between a consumer and a business, and a trade taking place. A consumer transferring his car to a trader does not fit into that category, but he is covered by a lot of other protections in the Bill and the consumer credit regulations. This chapter relates to the purchase of goods, which does not take place in that example.

Stella Creasy: I think the Minister needs to look at what the FCA can actually do. If a transfer is made with a requirement, such as a bill of sale that includes a provision that allows for the repossession of the car, that is legal. Although the FCA is tightening up how logbook loan companies operate and how they deal with debt, if people’s cars can be repossessed legally without recourse to a court, that practice will continue, because the FCA has law enforcement powers, not law-making powers. There is a distinction there.
Our amendment is intended to deal with the fact that such contracts are being offered and say that whenever they are offered, they should be covered by the same forms of protection as other forms of credit. Some Members may have bought a car using a hire purchase agreement. They would have that form of protection. I do not understand why the Minister wants to enable this little loophole to continue. As we have all agreed, it is being exploited by certain companies to exploit people in financial distress. The clause lists very clearly the kinds of contracts that would be covered by this; surely it makes sense to make it explicit that Parliament intends that people taking out any form of contract in the 21st century should get 21st century protection?

Jennifer Willott: Chapter 2 of the Bill relates to goods contracts, so the purchase of goods, whether with cash or through a finance agreement. If someone is borrowing money, whatever the arrangements, they are not purchasing goods, so the contract would not fall under clause 3. Only when the trader sells the car back to the original owner by the pay-off of the loan would it count as a good being transferred. In the original part they are not buying goods. It is money lent so it is covered by legislation, but not by the Bill because it is not a consumer purchase of a product, a good or a service. It would be covered by consumer credit legislation. It is definitely an issue for the FCA and for its legislative framework but it is not an issue for the Bill.
 Andy McDonald  rose—

David Amess: Order we cannot have an intervention on an intervention.

Stella Creasy: Let me try to see whether I can understand the Minister’s point from another perspective. Would she be happy to buy goods, not necessarily a car because we know that bill of sale agreements are used for cars in particular, under the auspices of a bill of sale agreement? [ Interruption. ] I am asking the Minister a question. I have to be clear with the Committee. I would not because it would not come with the requisite consumer protection that I have come to expect as a 21st century citizen. Therefore I am asking the Minister why she persists in not clarifying that these kinds of contract should be covered by 21st century protection.

Jennifer Willott: I have explained about three times now that this is because the clause relates to a goods contract—the purchasing of goods. There may well be an argument for updating the legislation, but this is not the Bill to do it in. The issue she raises is around consumer credit and that is not a matter for the Consumer Rights Bill.

Stella Creasy: The Minister is misrepresenting my position. I am not sure whether she is doing so wilfully or not. The matter is not about consumer credit. It is about the existence of bill of sale agreements and the lack of consumer protection that they enable as a result. The fact that they are used in consumer credit agreements particularly for vulnerable people on low incomes only serves to underline why they are exploitative and need reform. This is about the transfer of goods. A logbook loan agreement is about the transfer of goods. Therefore we are seeking to ensure that that contract, which involves the transfer of goods, cannot be underpinned by a piece of legislation from the 1800s that denies people who undertake those loans, often because it is the only loan that they can get, the forms of consumer protection that those of us who take out other forms of consumer loan would enjoy. That is the issue here. It is not about consumer credit. I hope the Minister can get that. It is about the existence of bill of sale agreements in themselves.

Jennifer Willott: The issues around consumer credit and access to consumer credit are not a matter for this Bill either. The hon. Lady says she wants to see the same protection for bills of sale as for other forms of consumer credit. This is a Consumer Rights Bill; it does not relate to consumer credit. The issue we are talking about here is the type of contract that enables someone to purchase goods from someone whether with cash or through a finance agreement. The question whether the contract is fair in the bill of sale would be covered in the unfair terms part of the Bill but not in this part of the Bill. There will be consumer protections for those individuals under clause 17 and contract terms but not under this clause.

Stella Creasy: Let me try one last time. This is not about consumer credit. Let us have a look at bill of sale agreements. Bill of sale agreements can be used for a charge. I hope the Minister can accept that. The clause states specifically that this consumer legislation will not apply to those kind of contracts; ergo, any of the protections that she argues would exist under the unfair contract terms provisions would not apply as well. This amendment is about bringing bill of sale agreements into the later clauses about unfair contract terms. We accept that it is an unfair contract term for somebody not to be able to repossess your car without recourse to the courts, for example, but as this clause is drafted, it leaves a legal loophole where bill of sale agreements can be retained, so those clauses do not come into play. That is the challenge we face here.

Jennifer Willott: I will say for absolutely the final time, the unfair contract terms part of this Bill applies to those contracts. I do not know how much clearer I can say it. The hon. Lady just said there was a gap and they do not apply. To make it as clear as I can: they apply to these contracts.

Stella Creasy: That is wonderful to hear. In which case, why does the Minister oppose ensuring that it is explicit in this section of the Bill that bill of sale agreements are covered by this legislation?

Jennifer Willott: I have made my case very clear.

Stella Creasy: Then we have no choice but to press the amendment to a vote, to make it clear that we would like to see watertight protection for consumers from bill of sale agreements.

The Committee divided: Ayes 6, Noes 8.

Question accordingly negatived.

Question proposed, That the clause stand part of the Bill.

Jennifer Willott: Clause 3 is essential to the chapter which follows. It sets out the types of goods contracts to which chapter 2 of the Bill applies, under which a trader agrees to supply goods to a customer. The scale of the domestic trade for goods in the UK is enormous. In 2012, consumers spent around £418 billion on goods and there are an estimated 335,000 goods retail businesses in the UK. As such, it is essential that we have a clear and modern framework of consumer protection in this area.
As part of creating a clear framework for consumers and businesses, chapter 2 aligns the rights and remedies for different contract types under which goods are supplied to consumers. However, because goods can be supplied in different ways—for example, sold outright, by hire purchase or merely hired—it is important that some provisions reflect these different ways in which goods can be supplied. The clause enables this operation of the chapter. Importantly, it also makes it clear that the provisions in chapter 2 apply to a mixed contract, where the goods are supplied together with a service, digital content or both, as part of the same contract.

Stella Creasy: We have expressed our concern about the one issue that we thought was outstanding in the clause. I am conscious that other Members have important points to make about how this provision will be applied in other jurisdictions, and I will give them time to discuss them.

Sheila Gilmore: Will the Minister indicate the Government’s view on the point raised in our evidence session about the wording of clause 3(3)? It outlines clearly in most regards the types of contract to which the provision will not apply, but clause 3(3)(e) excludes
“in relation to Scotland…a contract for which there is no consideration.”
The issue raised by the witness from the Scottish Law Commission was that, slightly oddly, in seeking to make that particular paragraph apply to Scotland, the Bill does so in language not applicable to Scotland. Consideration, in relation to a payment or equivalent, is not a recognised term; the suggestion was that a “gratuitous contract” would be the appropriate term. That may seem a minor matter, but in a paragraph that applies specifically to Scots law, not to use the appropriate language is wrong in principle and could give rise to issues.
Litigation in what we used to call mercantile law in Scotland, from which legislation such as the Sale of Goods Act 1979 emerged, can be obscure and turn on the use of words. No one wants to see a situation in which the use of an inappropriate term gives someone the opportunity to argue the opposite of what was intended. That might be a relatively minor matter but, by consulting with the Scottish Law Commission and returning on Report with an amendment, it could be corrected simply.

Jennifer Willott: My understanding is that the wording was agreed with the Scottish Law Commission. “Consideration” is used in the Supply of Goods and Services Act 1982 and we intend to be consistent with that. When the discussions took place, we understood that to be an understood phrase in the law. Therefore, to ensure continuity and consistency, we used that in the Bill.
As the hon. Lady said, the legislation covers different jurisdictions. There are, therefore, examples of phraseology that may not have originally appeared in Scottish law but they have been agreed and, over time, used in that context. That wording is in the existing legislation and it is transposed into the Bill.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

Clause 4  - Hire-purchase agreements

Question proposed, That the clause stand part of the Bill.

Jennifer Willott: The clause clarifies what is meant by “ownership of goods” in chapter 2 of the Bill. That is a key concept, as most of the contracts to which chapter 2 applies involve the consumer obtaining ownership of goods.
The clause defines ownership of goods—this is slightly techie, so bear with me—as
“the general property in goods”,
which means full rights over those goods. That is distinguished from situations in which a person can use those goods but does not have full rights of ownership. That is technically called “special property.” The clause ensures that the Bill’s concept of ownership is consistent with the concept of property in goods under the Sale of Goods Act 1979. That means that existing legal rules regarding the passing of ownership or property continue to apply to certain contracts that are also covered by the Bill.
The clause acts as a signpost to specific provisions in the 1979 Act about the passing of property. That will apply for determining when ownership of goods is transferred under a contract of sale of goods.

Stella Creasy: The Opposition do not have any concerns about the clause. Some people have expressed confusion about some of the language and terms used in the Bill. Therefore, will the Minister set out why the Government adopted some phrases from existing legislation when they changed the language in other parts of the Bill? It would be helpful if she set out the thinking behind that discrepancy.

Jennifer Willott: In some areas, in order to ensure consistency across legislation, we have maintained the same language, particularly in those areas where we know that a generally understood concept exists. The Law Commissions, both in England and Wales and in Scotland, have said that well-understood and well-argued concepts exist that people understand. To ensure consistency, we have continued to use them. One purpose of the Bill is to make the system easier for people to understand. Where the language is not bound up with clear past definitions and it is possible to make it slightly easier to understand without losing some of the legal background, we have endeavoured to do so.

Stella Creasy: It is helpful to put that on the record. As my colleagues might point out, lawyers might understand, but those of us with a different background could struggle.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Clause 5  - Sales contracts

Question proposed, That the clause stand part of the Bill.

Jennifer Willott: Clause 5 defines a sales contract for the purposes of the Bill. The Bill aligns rights and remedies across goods contracts, so that most of chapter 2 applies to all contracts within the scope, but some provisions need to reflect the different ways in which goods can be supplied, so a clear definition of each contract type is necessary. If ownership of goods transfers to a consumer in exchange for a price, it is a sales contract. A contract is also a sales contract if the goods are to be manufactured or produced and then supplied via a trader to a consumer. That makes it clear that the consumer has protection if the finished product does not meet the statutory standards, rather than protections applying only to the materials used. For example, when a baker designs and makes a wedding cake to order for a consumer, the contract between the baker and the consumer would be a sales contract for the finished cake, not just the ingredients that went into it. The clause sets out that definition, so it is important to make the subsequent clauses work.

Stella Creasy: The Opposition do not believe the clause to be contentious and we have no concerns about it.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Clause 6  - Contracts for the hire of goods

Question proposed, That the clause stand part of the Bill.

Jennifer Willott: The clause defines a contract for the hire of goods as it applies between a trader and a consumer. The Bill aligns rights and remedies across goods contracts, so that most of chapter 2 applies to all contracts in the scope, but some provisions need to reflect the different ways in which goods can be supplied, so a clear definition of each contract type is necessary. A contract is a contract for hire if a trader gives a consumer possession of goods with the right to use them for a given period, but the consumer does not obtain ownership of the goods.

Steven Baker: I thought I would take this opportunity to tell the Government that they seem to have made an omission in the Bill. It does not include the reverse of the clause—where the consumer transfers ownership of goods to the trader, such as in a deposit cap contract in banking. I hope the Minister will not mind if I table amendments on Report to rectify that omission, and I hope she will look at it between now and then.

Jennifer Willott: I am more than happy to look at it.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Clause 7  - Hire-purchase agreements

Question proposed, That the clause stand part of the Bill.

Jennifer Willott: The clause defines what is meant by a hire-purchase agreement for goods for the purposes of chapter 2. A contract is regarded as a hire-purchase agreement if two conditions are met: first, if under the contract the goods are hired to the consumer by the trader in return for periodical payments; secondly, if ownership of those goods will transfer to the consumer, providing that the terms of the contract have been complied with and that the consumer exercises their option to buy the goods or some other condition is satisfied.

Stella Creasy: Again, we do not believe that this is a contentious part of the Bill.

Question put and agreed to.

Clause 7 accordingly ordered to stand part of the Bill.

Clause 8  - Contracts for transfer of goods

Question proposed, That the clause stand part of the Bill.

Jennifer Willott: The clause defines contracts for the transfer of goods by a trader to a consumer. A contract for transfer is a contract under which the consumer becomes the owner of the goods, but which is not a sales contract or hire-purchase agreement. By defining this category, the clause ensures that such contracts benefit from the provisions in chapter 2. An example of a contract under this category could be where there is no monetary value assigned to the goods. For example, if a trader offers a car in exchange for the consumer’s present car plus £100, as no monetary value is assigned to either vehicle, the contract would therefore be classed as a transfer of goods, despite some money changing hands. A contract could also fall under this category if it is a mixed contract—for instance, a contract for both the supply of goods and the performance of services where, although goods are supplied, the transfer of goods is not sufficiently central to the contract to make it a sales contract.
For example, if a consumer contracts with a carpenter to fix a shelf and the carpenter provides the wood and nails, those goods are being transferred, but they are not central enough to the contract to make it a sales contract. The contract between the consumer and the carpenter is for service, with the supply of wood and nails being a transfer of goods.

Stella Creasy: The only thing that I want Ministers to consider is the issue about the different terms, which was raised with us on Tuesday by the Scottish Law Commission. The clause refers to the concept of consideration as a noun rather than the adverb. My colleague from north of the border might have more to say on this. I think that we are all looking for what the witness called “jurisdiction neutral” terminology in the legislation, so that there is no expectation that, when someone gets to the border, somehow things will change. Some thought is required to make sure that the concept of consideration and how it is portrayed in the Bill are consistent. Has the Minister had any further discussions with the Scottish Law Commission about the concerns that it raised on Tuesday?

Jennifer Willott: I think that I covered that in my response to the previous questions asked by the hon. Member for Edinburgh East, who raised the issue of consideration and the use of language.

Sheila Gilmore: The answer that the Minister gave earlier appeared to say that everything had been resolved, but, given that the issue was raised recently in the evidence session, it may not have been resolved.

Jennifer Willott: I said that consideration is used in the existing legislation, so we are trying to ensure consistency in legislation where there is a well recognised legal understanding and interpretation of the phraseology; in the previous case, that was in the Supply of Goods and Services Act 1982. This relates to the previous point that the hon. Lady raised. On occasion, it is possible to simplify the language; at other times, it is important to ensure that we have consistency in the wording where a legal interpretation is behind it.

Stella Creasy: I thank the Minister for that reply. In her own example of a car being given in part-exchange, can she explain how that would work north of the border, given that they do not have the concept of consideration? Does she believe that the law as currently drafted would deal with the anomalies that the Law Commission picked up on Tuesday?

Jennifer Willott: The Bill applies to England, Wales and Scotland. Following a legislative competence order, it will apply to Northern Ireland as well. My understanding is that there is no difference in how the Bill applies. When it is enacted and becomes law, people will have the same rights in Scotland as in England and Wales.

Stella Creasy: The clause talks about consideration as a noun that would be applicable to agreements. Can the Minister set out for the record, so that people can have confidence, that the concerns raised on Tuesday have been addressed? How will hire purchase agreements work in Scotland, as opposed to England where the concept of consideration applies?

Jennifer Willott: They will work in exactly the same way as in England. We have considered this. The Law Commission has been involved. We have consulted the Office of the Advocate General on the application of the law in Scotland, and everyone is happy.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Clause 9  - Goods to be of satisfactory quality

Stella Creasy: I beg to move amendment 3, in clause9,page5,line28,after ‘goods’, insert
‘, or any claim made as to the outcome goods will achieve,’.

David Amess: With this it will be convenient to discuss amendment 4, in clause10,page6,line14,at end insert—
‘(3A) In assessing whether goods are fit for purpose any public claims made by the trader as to the purpose of goods shall be taken into account.’.

Stella Creasy: We come to what I like to call the Rolling Stones element of this afternoon: the concept of satisfaction. I could make another joke about being fit for purpose, but there is a watershed in this country for a reason.
The amendments are designed to tease out the nub of many consumer complaints: how can someone be confident that what they have bought meets their aspirations? That has been the subject of various debates in the Business, Innovation and Skills Committee and more broadly in society. How can someone be confident that something is of satisfactory quality?
Clauses 9 and 10 are about goods being fit for purpose, and the amendments are probing. I hope that the Minister will accept, in good temper and spirit, that there is a genuine debate about how to decide whether something is satisfactory. The disagreement has been about whether that should be an outcomes-based test or left to the trader to determine what is satisfactory. We recognise that there are arguments on both sides. What might be satisfactory to one person might not be to another. That is why we welcome clarification. For us, the moot point is how to determine whether something is satisfactory or fit for purpose every single time.
Our amendments are designed to get to some of the aspects behind those decisions. The aim is to get behind people’s thinking about what constitutes satisfactory or fit for purpose. That could include claims made to them about a particular good and what it will achieve. The point at which a trader makes a claim about a good and what it might achieve should be taken as a measure of satisfaction. We have read the description that the Minister gives in the clause—I welcome her clarification on that but that is slightly different from the law as it currently stands. There is a margin of disagreement in which many consumer complaints could be generated, with regard to what people consider satisfactory or fit for purpose.
If somebody has made a claim that has influenced the consumer in good faith to buy, that should be taken into account. The amendment would simply set that out as an explicit standard that consumers should expect. If a trader has told someone that a mop will clean floors so that they are spotless, and they are not, the consumer should be able to say that the product is not satisfactory and does not meet the test that the trader set. That would be enshrined in law and not be an after-the-fact matter. The trader said that is what the product would do; it is not satisfactory because the trader said it would do this and it has not done so.
Without the amendment, the risk is that a trader could argue that they believed the floors to be spotless or that, even if they are not spotless, the product has made a good attempt at cleaning, so why complain about the mop? We are all concerned about ensuring that we have mops that make our floors spotless when we are told that they will. I saw an advert the other day that seemed to suggest that and I was tempted.
The amendments would clarify for consumers and traders the nature of the claims that they make and how they would influence, when assessing whether rights have been infringed, whether the product is not fit for purpose or satisfactory. The Business, Innovation and Skills Committee looked at this in detail and came to a slightly different decision. It felt straightaway that there should be an outcomes-based test for these purposes. We understand the Minister’s concerns about that.
We are concerned about advertising that makes particular claims. For example, Lucozade for a while was advertised as hydrating and fuelling people better than water. The Advertising Standards Authority held that that claim was too far removed from the approved statement and that it should not stand. We think that if a consumer buys a bottle of Lucozade and thinks it will have that effect, that should be taken into account when deciding whether it is satisfactory or fit for purpose.
There is also a question of parasitic packaging. I do not know whether the Committee is aware of that concept. It concerns a number of brands and how their branding might be used. Advertising and packaging, such as home brands, can seem similar to very famous brands, and the claims are made through that. By being very clear about explicit terminology in this part of the Bill, we can be confident that consumers base their decisions on accurate information.
We want the role that such advertising issues play in the decisions that consumers make to be made explicit in the legislation. There have been concerns about the enforcement of rules on parasitic packaging. That is an issue for brand competition. We think that this is relevant to the decisions that consumers will make about whether a good is fit for purpose. If they act on one piece of information but are getting another, it is not clear to them whether their rights are being infringed and whether they can assess whether something is spotless. If my home-brand mop claims to keep my floor spotless and a well-known brand does not but looks so similar that I cannot tell from the adverts, where do I stand? It would clarify matters if I could say that an advertiser had promised spotless floors, so that was part of the contract with which I had engaged and therefore that I had a reasonable expectation about satisfaction and spotless floors. That would also stop the erosion of confidence in certain brands that occurs when it is not clear what claims are being made or why that makes a difference in terms of consumer rights.
I am sure that people have complained to other members of the Committee about the quality of goods that they have received and the difficulty of proving to a trader that those goods were not sold as seen and that they did not receive what they expected. We think that there is a balance to be struck between requiring a good to deliver exactly the same outcome every time and leaving it up to traders to determine what constitutes satisfaction and fitness for purpose. The test of whether goods are satisfactory and fit for purpose should hinge on what a consumer was told at the time of purchase. I hope that the Minister can give us further detail on how those issues will be dealt with.
I recognise that satisfaction is slightly different from fitness for purpose, and I will provide an example to illustrate how our proposals would apply to fitness for purpose. Let us imagine that a customer walks into a hardware shop during a rain storm and says that they need something to keep them dry, and the trader explains that they do not sell coats or umbrellas but they sell waterproof bin liners. If the consumer buys those bin liners for the purpose of keeping dry but they turn out not to be waterproof, they would not have fulfilled the requirement that they be fit for purpose. That requirement would not exist if the consumer had not stated or implied a desire to keep themselves dry.
The question in clause 10(4), which amendment 4 is designed to probe, is whether the consumer could reasonably be expected to rely on what the trader says. If a trader tells someone in good faith that something will keep them dry and it does not, does that mean that it is not fit for purpose even if that was not its original purpose? Government Members are looking a bit confused, and so were we. We felt that what someone was told at the time of sale should be the test of whether those requirements have been met, and the amendment is designed to tease out the Minister’s thinking on the matter.

Andrew McDonald: I have another example of entirely misleading claims being made for the qualities of products. Flora pro.activ claimed that no other food lowers cholesterol more. Not only is that an issue of quality, but it is a dangerous claim to make in an attempt to impact on people’s health choices. We should take the matter extremely seriously and ensure that products produce the outcomes that they claim in their advertising puffery.

Stella Creasy: My hon. Friend is absolutely right. His example touches on advertising regulation, which is not the subject of the Bill, and on concerns about the impact that such messages have on consumers’ choices. We must ensure that consumers have appropriate redress locally. It is no good for companies to be able to make persistent misleading claims—the Advertising Standards Authority does an admirable job of tackling such things—that influence consumers’ purchasing decisions, and for consumers to have no clarity of redress. In such a situation, a trader would be able to say, “We think that no other food attacks cholesterol more than this. You may think that that is unsatisfactory, but we disagree.”
If a claim has been made, that should be taken into account, because a consumer bought something in good faith on the basis of that claim. We think that that is different from saying, “It has always got to be that someone’s cholesterol is reduced, and if their cholesterol is not reduced, the good is not fit for purpose.” That recognises the distinction between a consumer’s reasonable expectation about the quality of a good, and their reasonable expectation about the quality of a good based on a claim that was made to them. If a trader has gone so far as to provide such information, the consumer’s rights should be based on that. We should not wait for misleading advertising to be dealt with nationally; we should give consumers clear powers to challenge it, because it affects their purchasing power.

Andrew McDonald: The 50-plus male population seems to be the target of many such products, including foods that claim to lower cholesterol or hair restorative products that claim to target 100% of grey hair. A caveat that explained, for example, that while the hair restorative might target 100% of grey hair, it was likely to miss 50% might provide a bit of clarity for everyone.

Stella Creasy: My hon. Friend makes the case for the amendments by emphasising the need to be honest about what a product might actually achieve. Far be it from me to suggest that he would need such a product, but were he to buy it, his satisfaction would be based on the outcomes that it would generate on the basis of the claims that had been made to him about what it would do for him. So some clarity and honesty is needed about what the product would do, and therefore that influences whether or not he really could go back to a trader.
The amendments are as much about trying to tease out protection for the traders as for the consumers. For traders to be confident that if someone came to them and said, “I am not one of the 50%”, they would want to have a reasonable expectation of saying: “Actually, we never claimed that you would be, but we claimed that half the people involved in this sale would experience this level of satisfaction. That you are unsatisfied is sad, but it is not a reason for returning the product and therefore getting your money back.” I hope I have set out why we felt it was important to clarify those things.

Mark Durkan: I thank my hon. Friend for giving way. It is a not a voice-activated intervention on the basis of the grey and disappearing hair. Going back to the typical claims made, a leading brand might be well known for the claim of killing 99.9% of all known germs. Many other chain brands and lots of other derivative brands use exactly that same claim. Recently, at a BT young scientist exhibition, a number of schools proved that none of the brands actually did so. In some cases the leading brands performed least well.

Stella Creasy: My hon. Friend proves the point. There would be a distinction between a false and misleading advertising claim, which would be an issue for the Advertising Standards Authority, and a consumer’s right, having bought a product thinking it would kill 99.9% of germs on the basis of seeing the advert and the claim that the trader made at the point of sale. All we are trying to say with these amendments is that where such claims have been made, they should be relevant to tests of satisfaction and fitness for purpose.
This is completely separate to whether or not such claims should be made in the first place. We accept that this is not within the scope of this Bill, but what we feel is in its scope is the idea that consumers’ rights should be dependent on what information they have been provided with. That is where these amendments seek to get to. With that in mind, I hope the Minister will engage in that debate and give us some clarity about where she sees some of these issues of the claims that traders make and how they fit into questions about satisfaction and fitness for purpose. For most consumers who have that quibble, this would be very welcome.

Steven Baker: This is a fascinating debate and I am glad the hon. Lady has opened this subject. I was particularly glad that she began with a degree of humour about satisfaction, because it raises the question of what really is satisfaction when consumers buy goods. I think we could agree that satisfaction is a subjective thing. While I would rarely consider buying a motorcycle with less than 750cc, or 100 horsepower perhaps, others might think that it would be an entirely satisfactory motorcycle. We are always going to look for 100 horsepower per driven wheel, as anybody might reasonably expect on the public highway.
What is important to recognise is that consumers will have different needs in the goods that they select. The hon. Lady brought forward a particularly objective example, the notion that a floor cleaner must achieve the object set out in the advertising. When I look at the Bill, I notice that clause 9 subsection (2)(c) talks about:
“all the other relevant circumstances”,
and refers to subsection (5). This then talks about the “characteristics of the goods”, and subsection (6) states:
“That includes, in particular, any public statement made in advertising or labelling”.
So although she said clearly that this is not a Bill about advertising regulation, the Bill has given her a bit of an open door in saying that the relevant circumstances include public statements being made in advertising.
Where I am cautious about this amendment, is that it seems to indicate some of the Marxist roots of the Labour party. It seems to suggest echoes of the mistaken Labour theory of value, the idea that one can objectively determine whether something is worth a particular price that might be paid, or any other particular means of exchange.
The amendment says:
“or any claim made as to the outcome goods will achieve”.
If only buying and selling was as simple as whether or not the objects of your desires met particular outcomes. I feel sure we will all have watched the Lynx adverts and I doubt very much whether any of us seriously expects angels to fall. I look at this clause and think that, in so far as it is necessary to deal with this issue, the Bill already deals with it; and in a good liberal and conservative way, it deals with it in such a manner as to have a subjective theory of value and, thank goodness, rejects the old, out-of-date, 20th-century, neo-Marxist objective theories of the other side.

Jennifer Willott: Claims about the outcomes that goods will achieve often influence customers. We have heard about my hon. Friend the Member for Wycombe purchasing Lynx in vast quantities as a result of the adverts that he has seen. As has been said, those claims are a key standard against which consumers measure the performance of the goods as well. Therefore it is right that claims about important outcomes—key outcomes—may be taken into account when assessing whether a good is satisfactory. Those sorts of claim can already be taken into account under clause 9.
The clause ensures that, where a consumer contracts with a trader to supply goods, the goods supplied must be of satisfactory quality. The goods should meet a reasonable person’s expectation of quality, taking into account factors such as any description of the goods and the price paid for the goods. But also taken into account are “relevant circumstances”, as the hon. Member for Walthamstow highlighted, which
“include any public statement about the specific characteristics of the goods”.
The phrase “specific characteristics” is deliberately wide. It would capture specific aspects of the goods that were referred to in publicity. That could include key outcomes—for example, that a washing-up liquid will remove grease and that people will get 100 washes from one bottle. It could be something to do with the cleanliness of people’s floors. However, it could also cover other attributes. For example, the bottle could be eco-friendly. That is not an outcome but an attribute of the product. The phrase is therefore designed to cover a wide range of different things that might influence someone to purchase something.

Andrew McDonald: Does the Minister agree that this is really a Ronseal concept? We want products to do what they say on the tin. That is what it is all about. People making extra-special claims that are most unlikely to be fulfilled is surely what concerns us in these circumstances.

Jennifer Willott: Yes, there is a balance to be struck. The phraseology is wide enough to capture a lot of things. One issue that a number of hon. Members have raised is misleading claims. Misleading advertising is already illegal. It is caught by consumer protection regulations. There is also the Advertising Standards Authority. There is protection built into other legislation to ensure that.

Sheila Gilmore: I think that the Minister is saying that these matters are already dealt with and perhaps it is not necessary for the individual to be able to seek redress in some of these circumstances. If the current law is so good, why is it that the claims that my hon. Friend the Member for Foyle mentioned and that had been tested are still capable of being made?

Jennifer Willott: Currently, consumers do not have an individual right to redress under the consumer protection regulations, which are the regulations that cover misleading and aggressive practices—that would cover many of the issues that have been highlighted today. However, I am glad to be able to reassure hon. Members that the Government will amend those regulations to enable consumers to take action if they have been misled or coerced into a contract in a particular way. I hope that that addresses the point that the hon. Member for Edinburgh East has just made.
The Bill also enables claims made by a trader regarding the outcomes that the goods will achieve to be taken into account when assessing quality, because outcome claims are likely to be a relevant circumstance in someone’s decision as to whether to purchase a good. However, not every claim about outcomes is intended to form a standard against which goods should be assessed. Public statements in advertising can be humorous and not designed to be taken literally, as we have already heard with the example of Lynx. For the women in the room, Herbal Essences shampoo provides another example. If what the makers claimed was true or what they depict in the adverts was true, no other shampoo would ever be bought by a woman. Clearly, a lot of these things are designed to be humorous, rather than to be taken literally, so we have to be careful about how we phrase the legislation in order not to catch that too much.
The health claims on products were mentioned earlier. If the health claims induced a consumer to buy something that they would not otherwise have bought, that would be covered by the legislation that I mentioned earlier as well. The legislation would also cover parasitic packaging, which was another point made by the hon. Member for Walthamstow. It would be covered by the consumer protection regulations, because the claims are misleading. Everything such as that would be covered under existing law.
Amendment 4 would take into account any public claims made by a trader as to the purpose of the goods when assessing whether they are fit for purpose. It is definitely important for consumers to be protected if goods are not fit for their advertised purpose, and the Bill provides that protection in clause 9. The standard of “satisfactory” quality can include goods being fit for their usual purpose, which takes into account public statements made around that. The purpose of clause 10, however—still on amendment 4—is to ensure that where consumers make known to the trader that they intend to use the goods for a specific purpose, the goods must be fit for that particular purpose, if the consumer makes that clear before purchase. This is the bin liners and rain example given by the hon. Lady. Clause 10 protects the consumer even if the intended use is not the normal use. If that has been made clear to the trader beforehand, the goods must be satisfactory in that context. Public claims about the purpose of the goods may not therefore be relevant, so requiring public claims to be taken into account could cut across the public protection provided by clause 10. We therefore do not think the amendment is necessary.
I hope that I have satisfied the hon. Lady that her concerns are already covered by the Bill and that amendment 4 could undo some of the protection that we have built into clause 10.

Stella Creasy: I thank the Minister and several of our colleagues for their comments. I am pleased that we are opening up a debate about Marxism. I draw the attention of the hon. Member for Wycombe to Habermasian theories of critical dialectics, because we are talking about the information that each partner is able to bring to communicative acts. Far be it from me to suggest that Hayek would not have recognised the value of the consumer in that relationship, because he would not have argued that the importance of individuals being able to take part in a communicative act took precedence over their role within the market. I am sure that the hon. Member for Spelthorne has views on that as well.
What matters is the information provided at the point of sale. That is the point at which a consumer could be misled by a claim. That was what lay behind our probing amendment. It is helpful that the Minister has set out for the record that advertising is included. The only issue outstanding for the Opposition is whether labelling and advertising would have priority over other forms of claims made by traders—the point about parasitic packaging is whether people buy something on the basis of general claims made about the quality of another product.
To go back to our mops, which clean floors simply, if people buy one thinking that it is the red brand—a particular type of mop—but they are actually buying an own brand and had not seen the packaging clearly enough, would the packaging for the own brand take precedence in that instance? The mop might not offer as clean a floor as one would have seen in the general advertising for the original product—that is the concern brought up by parasitic packaging.
Some of the own brands supplied by supermarkets, for example, are strikingly similar to well-known national brands, so consumers might buy them thinking that they are buying the real deal and so attribute a similar level of satisfaction or fitness of purpose to the general branding. We would like some clarification as to whether the clause is about the specific product, bottle or mop that someone might buy, rather than in the general sense of buying something in the same colour scheme. That would be helpful for consumers in untangling what this might mean for people when the clause is enacted.
Will the Minister be able to say that? It is helpful for the record if that can be set out, whether the clause is about general or specific claims, given the problem to do with parasitic packaging.

Jennifer Willott: Misleading packaging is a matter for the consumer protection regulations. If someone if misled and the overall presentation is misleading, that could well be a breach of the consumer protection regulations.

Stella Creasy: My point is slightly different. If a consumer buys a mop in a red colour scheme that turns out to be a supermarket own brand mop rather than one made by a well-known national mop maker, does the fact that that person thought that they were buying the well-known national mop maker’s brand supersede the fact that they bought a product in the specific packaging of the own brand mop, when it comes to that person’s rights with regard to the product being satisfactory or fit for purpose? It would be helpful if we set out that, as I suspect is the case, the actual mop that the person bought and the packaging it was in would come into play for any claim that was made, and not the person’s intent to buy a well-known brand of mop rather than the own-brand mop that they have bought in error because the packaging is so similar.

Jennifer Willott: The hon. Lady raises two different issues. One is potentially misleading packaging that could encourage somebody to buy a product without realising what product they were buying. The other is the quality outcomes of the product that they buy. That is a different issue. Those would be covered by quality standards. Consumers do not get rights associated with what they thought they had bought but with what they have bought.

Stella Creasy: I think that is what we are trying to get at. If the hon. Member for Wycombe buys an own brand deodorant but thinks that angels will fall because it looks very similar to a national brand deodorant, his rights of satisfaction will relate to the own brand deodorant that he bought. They will not relate to the fact that he might think that angels will fall because he thinks that, in general, somehow a particular smell emanating from him would generate such an experience—something that I am sure is much the case.

Steven Baker: I never said any such thing about myself. I merely referred to the advertising and said that none of us would be taken in.

Stella Creasy: As someone who has to spend the next few weeks in a room with the hon. Gentleman I am pleased to hear that.
With that in mind, we are happy to withdraw the amendment. I am grateful to the Minister for her clarification. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Jennifer Willott: Where a consumer contracts with a trader to be supplied goods, whether buying or hiring the goods or under hire purchase, those goods must be of satisfactory quality. The consumer must be able to rely on the fact that he or she will get the quality that they paid for, and if the goods are not up to scratch, the consumer should be entitled to a remedy.
Satisfactory quality is judged by what a reasonable person would expect of the goods in question, taking into consideration the price, description and anything said in advertising or on labelling. For example, a lower standard might be expected of cheap or disposable goods when compared with an equivalent item that costs more or is advertised as being particularly durable. Let us go back to kettles. With a cheap kettle, a reasonable person might not expect it to last very long in the first place, so if it stops working completely after four years of frequent use, the statutory right might not be breached and a consumer probably could not successfully seek a remedy, as the fact that it has stopped working could be seen as reasonable. If, however, a top-of-the-range kettle was purchased but after six months the heating element failed, a reasonable person could consider that to be unsatisfactory and so the consumer could successfully pursue a remedy.
If a consumer is made aware of a defect before buying a product that defect cannot be grounds for finding the good to be unsatisfactory, a matter raised in the evidence session on Tuesday with Martin Lewis. For example, if a consumer buys a T-shirt from a shop and when they go to pay the shop assistant explains that the T-shirt has a small hole in the armpit, the consumer would have no grounds to seek a remedy for a breach in this statutory right for that specific defect. Likewise, if a consumer has had a chance to examine the goods, a defect that should have been revealed by examination would not be grounds for finding the goods to be unsatisfactory. The same applies if goods were supplied by sample: a defect that would have been clear on a reasonable examination of the sample will not be grounds for finding the goods to be unsatisfactory.
The statutory right could be breached if the goods do not meet the standard or description of the product made in a public statement, as we have been discussing, such as in advertisements or in the labelling of goods. For example, if a TV advert for a washing powder states that it is guaranteed to remove tar from clothes at 30° but a consumer finds that that is not the case and they are left with stained clothes, they could pursue a remedy as the product did not live up to the statement that was advertised. However, such statements are not considered relevant if the trader was not or could not reasonably have been expected to be aware of them, nor if the statement was withdrawn or corrected before the contract was made. Nor should such a statement be considered if a consumer’s decision was not influenced by it.
The clause is important as it continues this existing consumer right and assists in streamlining key consumer rights for goods into one place, providing clarity and balance for consumers and businesses.

Stella Creasy: I think that our amendments have teased out the things that we are slightly concerned about in this clause, and we are grateful for the Minister’s comments. We have no further comments to make.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

Clause 10 ordered to stand part of the Bill.

Clause 11  - Goods to be as described

Stella Creasy: I beg to move amendment 5, in clause11,page6,line24,at end insert—
‘(1A) Where a trader is selling goods that have restrictions on who can purchase them, public communications about those goods, including promotional material and any promotional activities shall be required to reflect these restrictions.’.
There are several amendments to this clause. Because they address slightly different issues, it would be helpful if we debate them in turn. I will take the Chairman’s direction as to whether he wants to go through each amendment individually or wait until the end to see whether any other amendments will be considered by the Committee.
The title of the clause alone would explain to many consumers what the problem is. The title is:
“Goods to be as described”.
Therefore, all the amendments to the clause that we have tabled and the debate that we want to have on the clause are about these descriptions and what kind of information a consumer would need in a description to make a confident purchase. Perhaps we are back to those questions about communicative acts and angels.

Steven Baker: I am grateful to the hon. Lady for drawing my attention to Habermas, because as a humble aerospace and software engineer I do not have the benefits of a Cambridge doctorate in social psychology. Consequently, I am also very grateful to her for confirming my impression that the Labour party is, indeed, of Marxist roots.

Stella Creasy: I look forward to explaining to the hon. Gentleman precisely Habermas’s critique of Marx, why he was not a Marxist and why, in fact, he was part of a new school of progressive thinking about communicative acts and the role of the individual. I contend that that thinking goes to the heart of the clause, because it is the role of the individual to evaluate critically the information provided to them, which implies they would have equality of information to be able to do that.
Not all consumers are created equal; Labour Members want to do our best to help consumers to get there. Therefore we hope that, in the amendments that we have tabled and the critique that we offer, we can encourage those on the Government side to join us in using their best progressive instincts to think about how to empower consumers to take part in the communicative act of buying a good and having a conversation with a trader.
However, in order for a consumer to do that, any purchase needs to be informed by a series of pieces of information. Our amendments to the clause try to get to that concept of description, and what might be included in a description to enable a consumer to make a good purchase. We then want to look at how that might affect the way that goods are marketed, because as I think we saw in our previous debate there are questions about marketing and how it plays into the expectations that consumers have.
Good consumer legislation would not simply wait, perhaps in a draconian way, for state intervention. Those of us who are Habermasians believe very strongly in the collective empowerment of the individual, and therefore we do not merely want to wait for regulators to act to ensure that issues are dealt with but want to see that consumers have the rights to empower themselves to address issues.
Descriptions are at the heart of that process. If someone is sold something and the description of it is not clear, they will not have made a choice based on the information that they wanted to make such a choice. Therefore, amendment 5 is about trying to ensure that where descriptions are given they accord with the wider context in which a purchase is made. It is about where advertising is used, and what advertising it is reasonable to expect people to have seen and therefore to take into consideration in any purchase they might make.
If that sounds rather dry—perish the thought, in terms of consumer rights legislation—this amendment is about trying to understand the connection between the purchases that we might ask people, of any age, to undertake and the material and information, including a description, that they are given. The best example of this—again, I am afraid that I am going back to my specialist subject—is payday lending, and in particular the concern that payday lending advertisers were marketing and targeting their products at children.
This amendment is designed to test how we can address that issue, which we think is also a consumer rights issue, if not in the broadest sense. Any good Gramscian would think about the right of a child to go through an education system and learn about compound interest before being bombarded with adverts telling them to take out a payday loan. In a simpler sense––perhaps Hobbesian, as the hon. Member for Wycombe is so inclined to have a philosophy lesson on a Thursday afternoon in a Committee Room—

Steven Baker: Delighted.

Stella Creasy: I am sure that the hon. Member for Spelthorne would be more than happy to help. Cambridge doctorates are liberally sprinkled throughout the Committee. We think that the guidance on advertising, and therefore the information that consumers have, needs to be consistent. Although payday loans are not supposed to be for under-18s, that they are being marketed for under-18s creates an anomaly that impinges on their consumer rights.

Stephen Doughty: My hon. Friend makes an excellent point. She will be aware that Wonga was advertising its services to babies, or so it seems, on baby-grows at Blackpool football club and some of the other clubs that it has been sponsoring.

Stella Creasy: I know my hon. Friend feels strongly about that, because I believe his own local club was also involved—

Stephen Doughty: No.

Stella Creasy: No?

Stephen Doughty: It was trying to stop them.

Stella Creasy: It was involved in challenging that, certainly, because of concerns about how consumer protection is linked to advertising. Again, we have set out clearly that we believe the ASA has a role to play. It is shocking that whereas the drink and gambling industries have recognised their role in not infringing on our children’s consumer rights by advertising to them, the payday loan industry did not see such a case. We know that 500,000 payday loan adverts were shown to children in the past year alone. That means that the average child has seen at least 70 of these adverts in a year.
Martin Lewis, who came to speak to us on Tuesday, is passionate about this subject because he sees it as infringing on the ability of young people to make effective choices about purchasing loans. His research suggests that one in three parents with children under the age of 10 have heard their children repeat payday loan slogans from TV adverts. It has also been found that 14% of parents polled said that when they refused to buy something for their under-10s, they had been nagged to take out a payday loan for it.
We can change the advertising guidelines, but we should also consider the rights of the child in their experience of advertising and their ability to make effective decisions. Information transfer is a key part of consumer rights legislation, so amendment 5 is intended to equalise the law on advertising with people’s consumer rights, especially where there are restrictions on selling goods.
If we say that it is not in the interests of a child to be able to buy a payday loan, surely it is not in their interests to be marketed a payday loan. That is what the amendment is getting at. It is intended to ensure that the law on selling is mirrored in the law on marketing, which is a clear part of the selling transaction. It would be helpful if the Minister could set out how she sees that. Obviously the amendment is not just about payday lending advertising, but that is the most obvious example of where egregious behaviour has taken place. How does she see the connection between the information provided to a consumer and the way in which marketing is undertaken, given the Bill’s provisions on the concept of goods being as described? Obviously if the good is described as a good type of loan, as in the “Mr Sandman” advertisement and as in the payday lenders’ advertisements, there is clearly an issue about whether that is misleading.
It is unfair to expect a young child to have the same knowledge as an adult about terms and conditions, or to be able to read the small print of a logbook loan or whatever—children are being advertised logbook loans as well. Is there a case for equalising the way in which we protect them offline and online? Although there might be work that we can do on broadcast advertisements, we know that companies are also continuing to target games that might be marketed at children online, particularly on laptops, iPads, and iPhones. Where does protection begin for our young people in that situation? I should be interested to hear the Minister’s thoughts on that. I do not know whether other members of the Committee want to echo the concern that there is a consumer protection issue here as well as an advertising issue that we need to address.

Jennifer Willott: The amendment would require all public communications about goods that are subject to restrictions on who may buy them to state that restriction. Public communications would include any promotional material or activity. As the hon. Lady said, adverts either in print or in the media would be required the state the restriction.
The Committee will appreciate that, where such restrictions exist, they are found in sector-specific legislation. That makes sense. The fact that special rules are needed in such sectors shows that those rules are best placed in legislation that is specific to those sectors. The Bill will set the basic level of consumer protection for goods in general. Where sector-specific legislation applies, it will operate above the Bill, adding additional protection.
The advertising regulatory system is flexible and responsive. It would not be proportionate or necessary to set out in primary legislation such a sweeping, cross-cutting requirement on all traders to carry messaging in association with all restricted products, particularly where there is no evidence that traders and manufacturers alike are not already carrying responsible messaging. For example, advertising for age-restricted products, including alcohol, gambling and foods high in fat, sugar and salt, is covered by a range of strict rules, specified in the codes for broadcast and non-broadcast advertising, which are set, respectively, by the Broadcast Committee of Advertising Practice and the Committee of Advertising Practice.
Accepting this broad-ranging amendment would not take account of the existing protections for consumers that are in place and enforced by the regulator. I am concerned that the amendment would not allow suitable flexibility for the future. As technologies change, consumer expectations evolve and new products and means of advertising them are always entering the market. Those can far more easily be captured in the relevant advertising codes when evidence of harm is presented or when due precautions need to be taken to prevent potential harm. Establishing such requirements in the Bill could risk cutting across individual pieces of legislation and adding complexity to the law and, ultimately, would benefit no one, as appropriate restrictions and requirements already exist in sectors where they are needed. The amendment could undermine that, so I ask the hon. Lady to withdraw it.

Stella Creasy: I am not sure that the Minister is suggesting that it is acceptable for payday lending companies to target children—we are talking about children who have not yet even learned about compound interest in school—as we know some companies have been doing and have admitted doing. From what she says, she does not believe that there is evidence of any problems. There is no sectoral restriction on their doing that, which is why they have been able to do it.
Advertising restrictions on gambling and alcohol are matters of self-regulation. Those industries have been responsible in recognising that it is not appropriate to advertise alcohol to young people and that it should be clear that people have to be over the age of 18 to purchase such a product. Consumers therefore have the appropriate information about the goods that they can purchase. It is not so with the payday lending industry, which has not been responsible in its advertising and marketing. Hon. Members who have dealt with anyone who has had payday lending problems will be well aware of that.
I am a little bit confused. I understand that the Minister is concerned about this cross-cutting amendment, but will she give the Committee a bit more insight into whether the Government intend to deal with the industry in other ways? We Opposition Members are clear that we need to deal with how it markets its goods.
I am sure that the Minister will not suggest that the evidence from people such as Martin Lewis, about young people seeking to buy payday loans because they are marketed to them without any evidence of their ineligibility to have them, is not a concern. The amendment would require companies to be clear that people have to be over 18 to have such a loan. I have had cases of people under 18 getting such a loan. One could argue that they did not know that they were not supposed to have it, because it is not clear in the advertising, and that the loan was therefore not goods as described. Will the Minister say a little more about what she intends to do, given that there is a consumer detriment here? It is legal for companies to advertise in that way, and they will continue to do it?

Jennifer Willott: I am not commenting on whether they should be advertising to children. Clearly, that would concern a lot of us. I am saying that that is not for the Bill, which relates to the sale of goods. Issues to do with advertising standards should not be in primary legislation; they are part of the advertising codes. Those codes are flexible and can be adapted quickly because they are not in primary legislation. The advertising of payday loans might need to be tightened up, but that would be done more effectively by working with the Financial Conduct Authority or through the advertising bodies’ codes of practice; it is not an issue for the Bill.

Stella Creasy: The Minister’s answer makes it clear that she has not been working on this. Given that the information is relevant to a transaction, it would be relevant for a child to know whether they are able to buy the good as described. A child would not, in theory, be able to buy the good as described, because it is not supposed to be advertised to young people, who are not supposed to be able to take out such credit. It is disappointing to hear that she has not particularly engaged with this issue, which concerns many people.
If the Minister really wants to address the matter, she is perhaps selling short the capacity of this debate on consumer protection issues. After all, we are talking about the cost of credit, the information provided at the point of sale and whether the good is as described. Is someone buying a payday loan with the intention of paying it back, or are they buying a payday loan to get into the levels of debt that we are seeing? That is the way these things are marketed, and I am disappointed that the Minister does not feel that she can do more to protect our young people from misleading advertising that might influence their decisions on the goods that they buy.
Opposition Members may want to reflect on that and consider whether we can press our concerns elsewhere in the Bill. I urge the Minister to engage on the issue because, if it is not payday loans, it will be other industries that seek to exploit gaps in the advertising regulations to the detriment of the consumer. I hope she will take that seriously. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Stella Creasy: I beg to move amendment 7, in clause11,page6,line24,at end insert—
‘(1A) The trader is required to provide full details of the total cost of the goods prior to sale, including any additional service fees or charges that could be incurred by the buyer in purchasing the goods. This information should also be portrayed in all public communication.
The amendment follows amendment 5 by probing the issue of information that should be provided at the point of sale. We have all been frustrated when we commit to paying one price and suddenly another booking fee, advertising fee or admin charge is added afterwards. Many Members may have seen adverts recently for, say, broadband and thought they were being offered a fantastic deal only to read, at short notice, the on-screen small print outlining the extra fees. Inevitably, for a consumer to be able to buy a good as described—if it is described as a good deal—they need to know the price of the deal that they are being offered.
The amendment demands that traders provide the total cost of a good that people will have to pay, which should be part of the description. I would hope that that is not contentious. We have seen a number of practices that undermine the provision of such information, which is why the amendment would be worth while. All public communication should be clear, because just having the information in the small print takes us no further forward.

Stephen Doughty: I was glad to put my name to the amendment. I had such an experience the other week with Sky. I wanted to watch the Cardiff versus Swansea football match—I do not know why I bothered—and I was offered one price on the screen, but I discovered afterwards that the monthly cost is a lot higher. I cancelled the additional subscription as a result. The information on the screen was not clear, and the purchase can be made with the click of a button. I endorse what my hon. Friend is saying.

Stella Creasy: As a Manchester United fan, I share my hon. Friend’s pain. I wonder whether it is worth purchasing some of the games that I might want to watch.
My hon. Friend makes an interesting point: it is there at the click of a button. I know people might argue that a contract can always be cancelled and that people can always try to reclaim their money, but anyone who has ever had to do that knows how frustrating it can be. Anyone who has ever mistakenly bought something and then had to go through the rigmarole of recouping the cost knows that, if the cost was clearer at the point of sale, people would make a more informed choice.

Stephen Doughty: My hon. Friend makes an excellent point. I had the same experience. I discovered that I had effectively signed up for a monthly rolling contract. I had to give 31 days’ notice to avoid paying a higher cost the next month, so I cancelled the service on the same day that I purchased it. Luckily, I worked that out, but I am sure many people would not work it out and would find themselves locked into a contract for a number of months at a much higher rate than they thought they were paying.

Stella Creasy: Given the frustration, cost and time caused by that, a case can be made for getting a ticket for the game the next time round, as that would be simpler and quicker. Not all of us can do that, however, so we might want to sign up to a subscription service or buy tickets for things. Anyone who has bought train tickets or theatre or gig tickets online might have found themselves suddenly being charged an extra fee that they had not factored into the cost of the good—it was not as described to them. In those cases, what seemed like a great deal or a straightforward price is not as clear as was thought.
The amendment is intended to get to the heart of that problem. Whether something is a good deal is a separate matter. If the consumer knows the full cost of something, however, they can make a more accurate and informed assessment. Surely that is what a good as described should be. From conversations with the Advertising Standards Authority, we have some examples of some of the practices that exist. It has a role to play in how promotions are undertaken, but that is a general action that is not about specific rights when a consumer clicks the button for a game and actually discovers that they have signed up for something else at a much higher cost without realising it.
The ASA found against the Old Vic theatre, because a cursor hovering over “stalls” on their website stated:
“Stalls £16 to £70 standard”,
but made no reference to a £1.50 booking fee, even though that would only have been applied only once regardless of the number of tickets bought. The ASA would have been happy if the wording on the website had said “plus booking fee”, or “plus one-off booking fee”, or “£1.50 booking fee per transaction”, which is effectively what the amendment would make companies do. The fact that that information was not provided changed the price of the product on offer. Therefore, consumers were not getting the good as described, because the price was different. A £1.50 charge might not seem like much, but for consumers who have to sign up to particular contract terms, such as for broadband offers that require six-month commitments for a good deal, such charges should be factored in.
If such information were provided, it would allow consumers greater transparency on pricing and greater ability to compare and contrast the deals that were offered. That seems like a simple request, yet that is clearly not what many vendors want to do, because it is easier for them to say that they are offering a good deal on a partial pricing strategy than on a whole pricing strategy.
The ASA has set out some guidelines intended to ensure that, from the start, any extra fees relevant to a price are always included. That is partly a consumer interest issue. If a consumer has, in good faith, signed up for something and then seen that an additional charge is being applied, they might find out that they were not given the full details not straight away, but only when the bill arrives. In that case, how might they get redress individually? It is one thing to ask the ASA to look at adverts on the Old Vic website, but it is another thing for a consumer who might have booked tickets—In this job, I am envious of anyone who has time to go to the theatre—to get redress directly.
The amendment would require a total cost to be presented. That would also have an impact on things such as payday lending and high-cost credit, because the total cost of a loan or hire-purchase agreement would need to be provided. I will wager that anyone who has ever dealt with BrightHouse and seen its contract offers on white goods, with the mark-up and extra fees on those, would welcome consumers being given greater information before signing up to such a good.
I hope that the Minister will accept that the amendment tries to get at something that is a real concern to many of us and that she will set out how she thinks total cost will be portrayed, so that consumers can be confident that a good is as described—in other words, they know it is a good deal, because they know what they are paying for and when they will pay.

Jennifer Willott: Amendment 7 relates to communication about costs that consumers would face. The Government are committed to providing clarity and transparency to consumers on cost. As I am sure we are all aware from our constituencies, the lack of such clarity irritates people intensely. That is an increasing problem as people purchase more things online, because it is often in online purchases, such as complicated mobile phone contracts, that people might not be completely aware of all the details. That is why the Government have already legislated to tackle some of those issues.
The Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 contain provisions that require a trader to make the consumer fully aware of the total costs before a sale is made. The regulations come into force in June 2014 and will operate alongside the Bill once it is enacted. The main body of the amendment is therefore not required, because the matter is covered by those regulations.
However, the requirement in the amendment for information to be included in all public communication is new, and the Government believe that that would be a bit problematic because it could be enormously burdensome to businesses. For example, every time a price was altered, all associated communications would have to be altered. The wording of the amendment concerns me, because if a trader had to provide information about all the costs, in some instances that might put them off lowering a price or offering a special deal because they would have to change all the associated communications.
Furthermore, the provision of such additional information would also have a direct cost to businesses that use TV and radio adverts. Those of us who have heard radio adverts for financial services will be familiar with the babble of barely comprehensible jargon at the end, which is the audio version of small print. I am concerned that the way that the amendment is worded would make that a requirement for everything.

Mary Glindon: I am reminded that the issue is more one of consumer rights than of the potential costs incurred by businesses. Some such costs would be inconsequential to companies such as Sky or other broadband companies, to which my hon. Friend the Member for Walthamstow referred. Would the Minister not agree that how we get things over to the consumer must be the paramount consideration?

Jennifer Willott: I completely agree with the hon. Lady, and I will come on to misleading information in a moment. However, the cost to businesses does have implications for consumers as well. As I have just said, I am concerned that requiring that all the information be provided every time might prevent traders from doing special deals and so on, because it would make it more expensive for them to provide the information all over again. That would actually be to the detriment of consumers.

Mark Durkan: Does the Minister accept that the effect of the amendment might be not so much to ensure that all the gobbledegook is rammed in at the end of the advertisement as to remove the propensity for hidden charges and all sorts of surreptitious riders that are attached to contracts?

Jennifer Willott: The amendment says:
“This information should also be portrayed in all public communication.”
Providing such information in all public communications could be particularly burdensome and would probably lead to an increase in the amount of gobbledegook.

Mark Durkan: It might actually encourage providers to go for less complicated offers and bundles and simply make their offer more straightforward and clear so that people know what they are buying, how much it is going to cost them and for how long they are going to be stuck with it.

Jennifer Willott: That might be the case in certain areas, but we are talking about an incredibly wide range of goods—basically, anything that is a good. It is possible to simplify things in some areas, but in other areas the contracts people are signing up to are very complicated and not possible to simplify. [ Interruption. ] Well, a lot of services—for example, mobile phone contracts or bank accounts—require consumers to be given an awful lot of information so that they can judge whether something is a good and appropriate deal for them. There is a limit to how far prices can be simplified.
In 2007, the National Consumer Council conducted research into the amount of information given to consumers and the impact that that had on their behaviour. The report was entitled “Warning: too much information can harm” and showed that if people are provided with too much information, it just becomes white noise and they do not take it in. We must be more selective about ensuring that the information that consumers really need is available. I will address that issue in a moment.

Sheila Gilmore: I understand the Minister’s point about there being such a thing as too much information because we have all seen examples of that in the details we receive from banks and insurance companies. Far from making it easier to understand, the information given can make it more complicated. The key point is to have the total cost somewhere—at the top, as it were. Some of that might have to be broken down in more detail later, but the key point that people want to know is what it will cost them to make the purchase. That is a quite simple statement, not a complex one.

Jennifer Willott: I totally agree with the hon. Lady; a provision later in the Bill, about unfair contract terms, has a requirement for price and other terms to be prominent and transparent, to be assessed for fairness. That is the hon. Lady’s point: that the price should be up front in one place where it is easy to see. It should be prominent and transparent. The provision I have mentioned is meant to tackle that and the hon. Lady is right to say that that approach would make things much easier.
The amendment, however, does not say that. The important factor is that the individual needs certain information before entering into the contract; they need to know what they are letting themselves in for. That is provided for in regulations that I have already mentioned. There is also a requirement for advertising in other media to include appropriate information.
Work has been done on hidden costs, particularly those that appear when people purchase something online, on the basis of a cost that is shown up front; when they get to the end credit card charges and booking fees are added on, so the deal does not look as good as it did at the beginning. That is being tackled in the consumer contract regulations. Organisations will have to set out charges up front, and not hide them at the end. Which? has been running a successful campaign with ticketing websites, in particular, to make sure that booking fees and so on are given up front.

Stephen Doughty: I want to understand a bit more. The Minister talks about it being burdensome for business to change pricing and give the public more information. Many of the examples that we see are online, and changing information online is relatively easy and straightforward, and not particularly costly. I do not understand how the approach in question would be an additional burden to businesses.

Jennifer Willott: That is not what the amendment says. It specifies “all public communication”. That might be easy in some ways, but the amendment does not refer to all online communication, or certain circumstances. I am responding to the amendment that has been tabled.

Stephen Doughty: Indeed; but we have considered many examples, such as logbook loans, and I have just been looking at the website of Loans 2 Go, based around the corner from both of our constituencies: it would not be difficult for that company to change information quickly on its website, or on a couple of leaflets that it might have sitting around in the office, for the benefit of consumers so that they can understand what they are engaging in.

Jennifer Willott: That is already going to be set out in the regulations that will be out in June. They will require information to be provided to consumers so that they will be fully aware of the cost before the contract is agreed. That is already happening. The provisions will be in place by June and will run parallel to the Bill.

Mark Durkan: The Minister must know that some of the firms we are talking about send people information every couple of weeks, in their name, saying “This offer is addressed to you,” or “Here is your new phone” and so on; and it is still complicated information. If those firms can change those leaflets, which seem costly enough, to include people’s names, and target streets with different prices by the fortnight or the month, why is it so complicated to accept the thrust of the logic of amendment 7?

Jennifer Willott: I hope I have made it clear that we accept what is probably intended by the amendment, and that the Government are already bringing in regulations to achieve that. The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 will be implemented in June, and will require the trader to make the consumer fully aware of the total cost before the contract goes ahead. That is not necessarily the same as ensuring that that information goes into every single area of public advertising.
We know that providing people with too much information makes it more difficult for them to understand what they are letting themselves in for. The gobbledegook at the end of radio adverts does not help consumers. We need to ensure that when consumers are getting into a contract, they are given the information that they need beforehand in order to ensure that they are properly informed and that they sign up for the deal knowing what they are getting into.

Stephen Doughty: Is the only reason why the Minister objects to the amendment that it is about providing too much information to the consumer? I appreciate what she is saying about the regulations, but surely the Government should be on the side of providing more information to the consumer, not less.

Jennifer Willott: The Government are on the side of making sure that consumers have the necessary information before entering into a contract. Evidence also shows that providing too much information to people is completely counter-productive. Think about the amount of small print that we have in vast contracts that we sign up to. When people shop online, they get pages of tiny print and they have to click the little terms and conditions. That does not assist people making a decision to know what they are signing up for. With the regulations, we are ensuring that the information people really need about the total cost will have to be provided, and under the unfair terms part of the legislation the price has to be transparent and prominent for it not to be assessable for fairness. That is a way of making sure that the information that people need is provided, rather than there being the complete blanket provision that the amendment proposes.

Stephen Doughty: The Minister is trying to suggest that, in some way, loads of additional pages of contract information and so on would be provided. I agree that they are confusing, yet we are regularly required to have them—from banks, for example, when they change terms and conditions. The amendment clearly states that it would be the
“full details of the total cost”
—just the cost, and that that should be
“portrayed in all public communication.”
What is so difficult about that?

Jennifer Willott: A lot of that is already required, particularly on websites if people are purchasing something. We have already taken action to ensure that hidden costs cannot be included at the end. We are saying that ensuring that that information is provided across the board on every single good in every public communication is too draconian a measure. We think that it would potentially end up to the consumer’s detriment. Legislation is being introduced—it will be in force from June—to tackle what is at the nub of the issue, rather than it being done through the wording in the amendment, which we think is unnecessary. I hope that the hon. Member for Walthamstow will withdraw the amendment.

Stella Creasy: We have had a fascinating afternoon. I am sorry that the hon. Member for Wycombe has only just come back in, because he missed a great example, if we are going to talk about philosophers. I cannot tell whether it is an example of a kind of Marxian approach—or rather, Adorno, who believed that the public was too stupid to be able to evaluate critically the information that they were provided with and therefore it was for the state to be overthrown by the elite who were able to understand such things. It sounds like the nanny state to say that we could not possibly be clear with people about the fees and the charges when they are buying something. The Government, having said, “Yes, people ought to have that information”, cannot answer when they should have it.
In terms of saying that it should be in all public communications, we can look at the impact that that would have in another way: perhaps traders would be simpler and clearer in their advertising about what their costs were, which would benefit us all. I am very concerned to see the Minister dismissing financial information as gobbledegook. As a psychologist, I have looked at a lot of work about how people critically evaluate information, and it is not uniform. People require different types of information. However, arguing that giving people the charges, fees and total price that they might pay for a good is gobbledegook does not stack up.
That also seems rather to undermine the work of the Advertising Standards Authority, which states:
“In future we expect these”—
as in, the prices of these
“to be advertised from the start. For example a £25 ticket with a £2.50 per ticket booking fee should be advertised as £27.50. The advertiser may include a breakdown of the cost.”
The ASA is asking advertisers to be more transparent. When the Minister talks about the regulation, she cannot answer how people will get the information. She is looking incredulous, but she cannot answer a simple question: if she thinks it is right that people should have information about the charges and fees, when will they get that information? She has not answered a simple, basic question. It is not good enough to say that, in theory, people should get that information. When will it happen? At what point in the sales transaction will people have the details of the prices they will be asked to pay in order to be able to make an effective decision? That seems to be the nanny state, suggesting that people should not have that information freely and fairly to be able to make those assessments.

Jennifer Willott: At no point have I said that people should not have that information. In fact, I said that the Government have already legislated to ensure that the information is provided. The regulations require that the total cost and charges—for example, delivery charges—must be made clear to the consumer before the contract is made. What the hon. Lady is asking for is already provided in the regulations. However, that is not what the amendment would do. I have in no way contradicted anything that the ASA has suggested. I welcome what it is doing, because it is playing an important part in ensuring that the regulations are implemented effectively.

Stella Creasy: The Minister seems to be wilfully ignoring the issue, which is not whether the information should be provided, but how it is provided. She seems to object to the idea that it should be communicated publicly. Under the current regulations the booking fee will be provided in small print, but it must be provided clearly. The Minister has not satisfied us on this simple change. We thought she would be able to tell us how people will be able to access information, but she has not. We will therefore press the amendment to a vote.

Question put, That that amendment be made.

The Committee divided: Ayes 6, Noes 7.

Question accordingly negatived.

Stella Creasy: I beg to move amendment 6, in clause11,page6,line36,at end insert—
‘(4A) Prior to exchange of the goods or agreeing the contract, whichever happens first, the trader will explicitly provide the consumer with relevant details of their statutory rights under sections 20, 23 and 24 of this legislation.’.

David Amess: With this it will be convenient to discuss amendment 8, in clause12,page7,line9,at end insert—
‘(2A) Prior to sale all traders must provide consumers with an appropriate point of contact and their contact details.
(2B) Consumers may only contact traders on the contact details provided under subsection (2A) for the following purposes—
(a) to confirm ownership of the goods with the trader as set out in section 17; or
(b) to identify a trader against whom the consumer can exercise their rights under this Act.
(2C) Where sale of goods is facilitated by intermediary services it is the responsibility of the trader of the goods using these services to provide this information to the consumer.’.

Stella Creasy: Amendments 6 and 8 address two related issues about goods. Amendment 6 pertains to point of sale information, an issue about which my hon. Friend the Member for Middlesbrough feels strongly. He is not alone in thinking that the phrase “Your statutory rights will not be affected” does not mean much to many people; we were told on Tuesday that the research also shows that people do not know what their statutory rights are, so they do not know what will not be affected. The question for us today is, how do we improve the situation so consumers have better information? The nanny state should not decide what consumers do and do not need to know; rather, we should enable them to make the choice for themselves.
The amendment would require that
“the trader…explicitly provide the consumer with relevant details of their statutory rights under sections 20, 23 and 24 of this legislation”,
which we will come on to later. We think that could be done very simply. Citizens Advice, which is a strong proponent of the proposal, has come up with suggestions about the kind of information that could be put on the back of a receipt, for example. People should be told what their statutory rights are, not just that their rights will not be affected.
The Bill contains some proposals that we support. It will, for example, clarify the consumer’s right to return a good and what the time limit is. We recognise that we need to inform consumers and traders about those rights, but we must surely also recognise that it is best to inform people of their rights at the point of sale. Everybody should know from the get-go that they have 30 days to return something if it is not acceptable. Later in proceedings in Committee, we hope to encourage the Government to go further to clarify the time limits for repairs and refunds. If that basic information is provided in a clear format to the consumer, they will know whether it is affected by the good that they are sold.
That should be a no-brainer. That is certainly what Citizens Advice thinks. I know that the Government are discussing this matter with Citizens Advice in the implementation group. However, there is a risk, because it is one thing to say that it would be good to provide that information, and another to make sure it happens. Good traders want people to know their rights, because they also want people to know when they are pushing their luck. However, bad traders do not want people to know their rights and do not want to recognise that this is now a statutory provision. The amendment is about recognising in the legislation, as it stands before us, how best to do that. Just as with the debate about whether businesses will be consumers—we know that in time, the Government will come round to our position—we do not want to miss the opportunity on point-of-sale information. The amendment is simple. It sets out that the trader must be explicit about what people’s statutory rights are at the time of exchange or prior to agreeing the contract, so that before people enter into an arrangement, they know what they can do if something goes wrong.
I hope that amendment 6 is not controversial and will receive the support of Government Members. I recognise that the Minister may want to do it in other ways within the Bill, but we are looking not to miss the opportunity to put it into law so that it covers everything and everyone. We would like to hear from her on this. If not in this amendment, where else in the Bill will issues involving the provision of point-of-sale information be resolved?
Amendment 8 is about a related issue. When something goes wrong, especially for people buying online, from whom might they seek redress? At this point in the Committee—we have a mere 40 minutes to go—I will share a personal story, because I feel strongly about it. I finally managed to get a holiday with my partner last year in order to get away and get some respite, which I am sure we all recognise is important in this job. Having booked a hotel online, I found that it was not as I had been given to understand by the broker through which I booked it. Members can imagine my distress. I am sure that I was as distressed as the wife of the hon. Member for Plymouth, Sutton and Devonport might be about a loft conversion that was not suitable. We wish and hope for a wonderful experience, and then it does not turn out as we wished.

Oliver Colvile: I have to say that they are doing an incredibly good job. I am very grateful to them for doing such a good job.

Stella Creasy: If we get nothing out of today, the reassurance that Mrs Colvile is reassured will make us all feel better. [ Interruption. ] I apologise; I thought in the acoustics of the Boothroyd room that the hon. Gentleman said that somebody else had been involved in the transaction. I did not hear him clearly. Nevertheless, I am pleased for him about his loft conversion. Had he been as upset and distressed as I was to discover that the hotel was not as I had expected, he would have been further frustrated, as I was, to discover that the company through which I booked the hotel said that it had no responsibility for the quality of the hotel, and eventually that if I were to take up my rights of concern about the quality of the hotel provided, I would have to e-mail somebody in America. All of us recognise that that is a dead end in terms of getting redress or seeking compensation for a poor experience.
Alas, such experiences are not confined to me. The ability to exercise one’s rights requires direct contact and somebody to take responsibility for the protection of those rights. That is what the amendment seeks to do. In particular, it seeks to address something that concerns many of us: ticket touting. We know that ticket touting causes huge problems for fans of music, stage theatre and sport alike. Ticket touts rely on the opaqueness of the sites that they use to sell their goods, and on the use of technology to buy up tickets at short notice. It is incredibly difficult to hold them accountable. There is an all-party group on the issue, and I pay tribute to the work done by my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) to make progress on it. One way that such companies get away with what they do is by not providing the name of the seller of the goods, so that one cannot tell, for example, who is reselling a ticket, especially a ticket not meant for resale.
Such companies also buy up all the tickets available for sale straight away. They use botnets to buy them all up. We saw that with Monty Python, if anyone tried to buy tickets for that. All 20,000 tickets were bought within three quarters of a minute, only to reappear on the secondary market at 15 times their face value. We saw it with tickets for the Teenage Cancer Trust event. I was devastated about that, having seen that The Cure, one of my favourite bands, was playing. The chances of getting a ticket at any reasonable price is well beyond all possibility now.
Such companies get away with selling tickets that are meant to be sold for a particular price at a much more inflated price, at great detriment to the consumer, because they are not named sellers. The ability of any trader to avoid responsibility for infringing someone’s rights is a loophole that we want to close. Amendment 8 is about someone taking responsibility for being the trader when a product is purchased. The trader is the person against whom the purchaser’s rights would be exercised, so long as the product is not sold as seen. For touts, that would mean that those selling tickets would need to identify themselves. If they have permission to sell, that is one thing, but if they do not, that clearly infringes rights, because it raises the risks of buying a fake ticket. Anyone who has ever not got into a gig would have been horrified by that experience.
The amendment would also clarify whose responsibility it is to provide that information, and that is incredibly important in this age of online sales. When I booked a hotel through a third-party brokerage site, both the hotel and the brokerage site avoided accountability for the hotel’s quality by blaming each other. It ended up with me being told, “Try and e-mail someone in America and try your luck.” Just as someone would not blame the telephone if they were rung about a misleading sales offer, we should not say that it is the online trader organisations that are the problem; the problem lies with the trader and the rights someone would have against them. The amendment would ensure that the named trader who gave their address is the person selling the goods and not an intermediary. That would ensure that consumers can enforce their rights and that we recognised the world of online sales in the Bill. It is not about Google or eBay; it is about people using those services to sell goods and mislead people in how they operate.
Amendment 9 relates to clause 17 and is about ticket touting and protecting particular prices. The amendment is about how sales happen, rather than prices, which we will come on to later along with what we might do to protect some of our national games. Many will have seen what happened with the Olympics two years ago—it feels so long ago—in protecting against these practices and protecting the online sale of tickets. The market is estimated to be worth £1 billion, and it is operating in a twilight zone of rights. Amendment 9 would help address that problem while ensuring that real fans can access the tickets they want.

Oliver Colvile: The curious thing is that from time to time, I have to buy things online as well, and my difficulty is in ensuring that I have done it properly. [ Interruption. ] The hon. Lady laughs, but it is an important issue for an awful lot of people who are not as IT-aware or as IT-compliant as they might be. There has to be a way of ensuring that we protect them, so that they do not, after they have pressed the “send” button, find that they have contributed towards something that they did not mean to do.

Stella Creasy: I apologise for laughing. It was simply when the hon. Gentleman talked about buying things “properly” online, he echoed something that my mother has often said. For the avoidance of doubt, I do not in any sense compare him to my mother, but he hits the nail on the head. If someone has bought something in error, they need to be able to return it, just as they would offline. For example, two people might buy the same book for someone at Christmas, so one of them would want to return that book to the shop. That is harder online, because there is—not in every case, but in some cases—not necessarily a named seller, and that illustrates the problem we are trying to address.
There should be someone who takes responsibility in that contract for ensuring that a consumer’s rights, such as the right to return a good, can be exercised. I hope that the hon. Gentleman will support the spirit of the amendment, which seeks to ensure just that, as well as our recognition that a consumer’s rights would not be against Google, Chrome or iTunes, but the person selling the good. It is also about whether the sale was conducted appropriately.
If we can address ticket touting, it will not only have an impact on consumer rights, but on organised crime. We know that ticket touting is connected to a large amount of serious organised crime, because it is so profitable. It is estimated that organised criminal networks make £40 million a year from touting. The Metropolitan police have said:
“The lack of legislation outlawing the unauthorised resale of tickets and the absence of regulation of the primary and secondary ticket market encourages unscrupulous practices, a lack of transparency and fraud.”
We will come to discuss the particular protections that we want to introduce around prices for events of national significance when we come to clause 17, but the amendment is about getting to the heart of how companies are able to tout tickets and trying to close loopholes around sales. We want to be confident when we book a hotel with a certain facility that it actually has that facility, and that if it does not, we can secure redress, however it was booked. I hope that Government Members will support both the intent and wording of amendments 6 and 8.

Sheila Gilmore: I am pleased to have the opportunity to speak about point of sale, and perhaps to pre-empt or anticipate what the Minister will say.
The only argument that I have heard against the proposal is not that it is not a good idea, but that the implementation group will look the detail and deal with the issue. I see no contradiction between putting the measure in the Bill, so that it is clear that the change will actually be made, and the implementation group’s looking at the detail. If this is going to happen, I cannot really see any objection to putting it in the Bill and reassuring everyone that it will happen. The issue is not exactly new; there has been a gap in consumer rights under the Sale of Goods Act 1979 for many years. It was an issue back when I worked for the Scottish Consumer Council—more years ago than I care to say—and it comes up constantly, and has been raised by many campaign and representative groups.
How to tell people what they need to know without overkill is a challenge, but nobody wants something written in tiny, unreadable script on a receipt, or some notice in a shop that will not be read. I was struck by the work of Citizens Advice, which has given good examples —we have all received the briefings—of how information could be provided in a way that is not so obscure. Some organisations are good at dealing with people who are returning goods, or questioning whether something is satisfactory or fit for purpose, but many retailers, smaller ones in particular, either misunderstand the situation or deliberately appear to misunderstand, in the hope that the consumer will go away thinking that there is nothing that they can do.
Even after such a long time, during which much legislation has been passed and much work has been done by many organisations, disputes still arise over whether something is fit for purpose, or when something breaks after a short time. People may ask retailers, “What are you going to do about it?” but they are often fobbed off with “It’s too late,” or “It’s not right.” Unless people are insistent and clear, they do not always succeed. They may then go to a citizens advice bureau, or call the helpline, to get information, but they should have had that information first of all. If they had it to hand, they would not have to go on a long, complicated journey, in which they are rebuffed by the retailer, go to seek advice, and have to go back to the retailer and say, “I was in last week; you told me I could not return this, but actually I can.” That could be short-circuited for everybody if there was that information up front.
We are not asking for this wording to be in the Bill, or for the full detail to be worked out at this stage. However, if it is the Government’s intention to make this change, it would be of little harm and some positive good to accept the amendment.

Andrew McDonald: Before I make a few brief remarks on amendment 6, I stress that other products, in addition to the one I mentioned, are available for fine wood varnishing and staining of other materials; I say that before anyone accuses me of bias.
It has always struck me as rather peculiar to say that one’s statutory rights are unaffected. I realise that it is probably a statutory requirement that such a statement be made, but it is an offence to try to inhibit anybody’s statutory rights, so that has always struck me as a strange statement.
On the purchase of white goods—this relates to our earlier discussions—warranties are often made available to people at the last minute. We discussed the singularity of cost; I think the consumer would benefit immensely from a singular statement of the likely cost of any good at any time. On the issue of statutory rights, when I get to the checkout and am offered an additional service at some extortionate cost, I have always been content to say that I, like Martin Lewis, am quite happy to rely on my statutory rights, and do not require £70-worth of warranty for parts and labour.
I encourage the Minister to be open to this reasonable and modest amendment. We are trying to address the fact that people do not know their statutory rights; we heard in evidence that the phrase can be confusing and off-putting. Few people come away from reading such notices thinking, “I have the right to reject goods and have them repaired”, and the rest of it; they do not mean anything to them.
This sensible amendment would set out with great clarity a person’s rights at the point of sale, because that is where it matters. This issue can be addressed simply. We stand in queues at various emporiums; signs could be established there, or at the checkout desk. There are endless ways to address the issue. It would be a positive step in educating the purchasing public to say, “You have heard about your statutory rights; here they are,” and to set them out with clarity. The transaction would be infinitely improved, and people would know what to expect when they purchased goods.

Mary Glindon: I want to speak briefly on amendment 8. It is very simple and would make such a difference to the trade of ticket touting. It affects hard-working people who spend their money on holidays or concerts. It covers all ages; everybody is exploited under the system of ticket touting. It is right and proper that if someone cannot use a ticket, they should be able to sell it on.
I did not realise that viagogo was a ticket-touting organisation. Unfortunately, I have a season ticket for Newcastle United, and “Wonga” is displayed on the shirts. People say that it should be, “It’s just wronga that it’s Wonga”, which is fair. The message goes round the ground that we can sell our tickets on viagogo, if we do not want to use them. When I see those adverts while watching the depressing games I have seen lately at Newcastle United, it depresses me even more. I appeal to the Minister to consider adding the provision. It would give hope to those trying to tackle the unscrupulous —there is no other way to describe it—selling of tickets at exorbitant prices. That is all that I appeal to the Minister for on that issue.

Jennifer Willott: What the hon. Member for Middlesbrough said is key: he is right that people do not know their rights. One reason for the Bill is to try to make the system simpler, so that people can understand their rights much more easily. If people do not know their consumer rights, they will not try to enforce them. It is critical that we do as much as we can to simplify the system, make it as easy as possible to communicate, and ensure that the communication is right, because that is key to making the entire system work.
I shall respond to a couple of the issues raised by hon. Members before talking about the generalities of the amendment. My hon. Friend the Member for Plymouth, Sutton and Devonport, who is no longer here but can read my response in Hansard, talked about buying things properly on the internet, and not knowing what he was buying. I am sure that he will be absolutely delighted to know that the consumer contract regulations, which I mentioned a couple of times, require websites to make any payment obligations clear up front. Traders will need the active consent of the consumer for all payments. Websites will no longer be able to have pre-ticked boxes that add things without the consumer necessarily noticing; that will make it easier for people who are not IT savvy, or do not catch the things hidden away in the corner. Websites will have to make it very clear when someone has to make a payment, with a “pay now” button. That will make it easier for people in the circumstances he mentioned.
The hon. Member for Walthamstow told us an upsetting story about a holiday in a hotel that was not as advertised. There are already measures that apply in such circumstances. For example, if the hotel is part of a package deal, the package travel regulations apply, and rights are associated with that. In fact, a person would have the right to compensation under those regulations. If the hotel is not part of a package, the holiday should be covered by the consumer protection regulations. I shall come on to the point about information. There are ways that that situation could be caught and compensation could be provided. Working the hours we do in this place, I completely understand that a holiday is critical, and it would be upsetting if it did not turn out as planned.
Amendment 6 would require the trader to make the consumer aware of their statutory rights before the contract was made. That is critical, because information will be important in making the measures work. As we discussed, the Government have legislation requiring traders to remind consumers that it is their right to have goods that conform to the contract. That is in the consumer contract regulations. The reminder must be given before consumers are bound by a contract, but that in itself will not solve all the problems if people do not know their rights.
We heard repeatedly in the evidence session on Tuesday how important ensuring that people know their rights will be, which is why we have already established the implementation group mentioned earlier. One thing the group is considering is whether the provision of any mandatory information at the point of sale would make a valuable contribution to that objective, or whether consumers are more likely to absorb the information about their rights when a problem has arisen and they need specific advice. That is being looked at by members of the implementation group, which includes, as the hon. Lady said, the CAB and Which?. MoneySavingExpert, business organisations, officials from the Department and a broad range of other people are involved. They are looking at what the most effective point would be at which to access that information, and so on.
The implementation group is looking to ensure that consumers are well informed. It is looking at what the messages should be and the best way to get them across. It will be advising on the channels and the timing, and looking at when people are most likely to absorb that information. For example, businesses will need to know well in advance of the changes so that they can comply from day one, but consumers might be a bit confused if they start getting information about new rights a long time before they come into force. So there is definitely work to be done with the different bodies that need to know the information about the regulations and the legislation.
The implementation group is also considering where detailed guidance will be needed—presumably, for businesses—and, if something goes wrong, how consumers will access the detailed guidance that they need. There will also be a need for easily understood bite-size information that people can use. If something has gone wrong, they will not want to wade through all the detail in the Bill; they will simply want to know the headline stuff about what their rights actually are.
So the implementation group is looking at what the messaging needs to be, the different channels, the time when it can be provided, what level of information, and how best to provide that to businesses and consumers. We must get that bit right. If we do not get the information and that side of it right, the legislation will not make as much of a change as I think we all want to see. The group is also looking at point of sale, mobile phone apps and suchlike. It is trying to find different ways and to be imaginative about how we can ensure that people know what their rights are.
Adding a requirement in the Bill is not the right approach. We need to make sure that the information sharing is right, but, at the moment, there is a consensus about the most effective approach to that. The implementation group is working hard on it.

Andrew McDonald: I do not think that the amendment impacts on that in any way; it simply states that information will be explicitly provided. How that is done is left open, so there are no shackles or restrictions on how that information is communicated. It is simply a principle that the consumer be given the information. I think we would all agree on that.

Jennifer Willott: The amendment states:
“Prior to the exchange of the good or agreeing the contract...the trader will...provide the consumer with relevant details”.
In many cases—[Interruption.] Actually, for a lot of people, if something goes wrong with the good that they have purchased, the time when they need the information is after they have bought it. If someone’s kettle breaks down four months after purchase, they will probably not be able to find the receipt to find the information on the back. That does not mean that we do not provide the information there as well, but we must make sure that people have access to the information they need at the point when they actually need it. The amendment is specifically about the point of sale. I am not saying that that is not an important part of it, but there is still a discussion going on about the best way to deliver that, and until there is a consensus about the most appropriate way to do it, I do not think it should be in the Bill.

Sheila Gilmore: I hear what the Minister is saying, but the amendment does not preclude other things. There are many imaginative ways nowadays to do this, but the amendment does not say that that is the only way. It simply says that it should be there. It is important. As I said before, it is something that has been asked for for many years. I cannot see the objection to putting it in the Bill, and then the details will come after.

Jennifer Willott: I appreciate what the hon. Lady says. She has mentioned it a couple of times at various stages, so I appreciate that she feels strongly about it. That might be an important route for that information to be shared with people. However, because the implementation group is working on that at the moment and there is no consensus on it, it would not be helpful to put it in the Bill. It is important to ensure that we provide flexibility to look at the most effective ways to get the messages across.

Sheila Gilmore: I am still puzzled. One of the main organisations involved in the implementation has made it clear that it thinks that it should be in the Bill. If there is disagreement in the implementation group, is it about the detail rather than the principle?

Jennifer Willott: As the hon. Lady said, she has spoken to one of the members of the implementation group, who is keen to do that. Several people are involved with the implementation group. I have not attended a meeting, so I do not know the exact level of agreement or disagreement, but I know that they are working to try to ensure that the information sharing, strategy, channels, timing and so on are as effective as possible. I am keen to leave it to them to decide the best way of doing that. What the hon. Lady wants may be part of the final approach, but I do not think it is helpful to have that in the Bill.
Amendment 8 seeks to ensure that consumers have accurate contact information about the trader so that if something goes wrong with the goods they can easily pursue the remedies due to them. I completely agree that it is good for consumers to know who to contact and how, and when things go wrong, they should not be sent around the houses, or from one telephone number to another because that can be extremely expensive and frustrating, and people give up. None of us wants that.
As I have said before, the new consumer contract regulations that come into force in June will make it clear that traders must give certain information clearly and comprehensively. That information is, first, their identity—and, in answer to a point made by the hon. Member for Walthamstow, the identity of any trader on whose behalf they are acting—and, secondly, contact details of both traders, including address and any phone or e-mail. That may also include an address for complaints and queries. That is in the regulations and will come into force in June.
As a result of those regulations, the first and last parts of the amendment, (2A) and (2C), are not needed because they will be covered by the law when the regulations come into force. The other part, (2B), states that the consumers may use those details to contact the trader in two specific situations: to confirm that the trader has the legal right to supply the goods, or to identify the trader with a view to exercising consumer rights. I am worried that that is a bit limiting. For example, if a consumer wanted to contact the trader to obtain further instructions about how to use the goods or about an ongoing issue, but did not want to exercise their statutory rights, the amendment would prevent them from doing so. It would prevent the consumer and trader from maintaining an effective dialogue, which could be preferable if the aim is to ensure that both parties are able to resolve any difficulties as early and as easily as possible, rather than just relying on statutory rights.
I hope that the hon. Member for Walthamstow is satisfied that most of the information she is asking for in the amendment will already be required under the law and that the remainder is unnecessary.

Stella Creasy: This has been an interesting afternoon for all of us in understanding how the Government address consumer rights. I am conscious of time, but I want to go through amendment 6. The Government seem to accept the principle that we need to give people more information, but are holding back on putting that in the Bill because they would rather give it to people when they have been ripped off instead of at the point of sale, which is where they might want it.
I do not understand the Minister’s case. It is surprising that she has not attended a group meeting. Surely she should do so to understand the issue. The way things are going, we will all get to the point where buying a kettle is a fraught experience. I would want to know, before I bought it, what my rights were. If it broke within 30 days, my rights would be different from those if it broke after four months. I am sure that when we come to other parts of the Bill, we will see that that is a problem.
On amendment 8, I do not understand what the Minister is suggesting. We are asking for details to be provided before sale so that the seller can be confident.
I want to draw attention to ticket touting. If someone advertises tickets for something, it is not possible to know whether they genuinely have tickets until the money has been paid, by which time, if the site is a false one or is a botnet, it is too late. What the Minister is saying is not clear. There may be fraud, but there will be no one from whom to get money back. That is the difference. I do not know whether the Minister has bought tickets online and been defrauded in that way, but right now, because there are no direct contact details for that person, it is not possible to exercise one’s rights, or to know before the sale that those details are available.
For the rugby world cup, for example, we know that people are selling tickets, having been given them, but that they are not meant to be for resale, so there is a very real chance that anyone who bought such a ticket would still not be able to get into the grounds. Providing contact information at this point in time would crack down on that problem, because it will require openness about who is selling the tickets. It closes a loophole that people are exploiting. From what the Minister is saying, I do not understand not only whether that information will be available, but how and at what point in the transaction, which is what makes all the difference in dealing with such problems. If she can set that out, it would be incredibly helpful.

Jennifer Willott: The hon. Lady can read Hansard. I just said exactly that.

Stella Creasy: I am sorry that the Minister is so dismissive of a request for information about a serious and important issue. She told us about the implementation of the regulations, but she has not said whether the information will be provided before or post-sale. If she looked at and read the amendment, rather than being dismissive of it, she might understand that the question of information before sale is important. That is all we are asking for. If she had a bit more respect for the parliamentary process of scrutiny, she would understand that that is a reasonable question.

Jennifer Willott: I will repeat my previous comments: the regulations require the contact details of the trader to be given before the contract is made. I have already said that about three times, on various different interventions. The Consumer Contracts Regulations clearly require such information before the contract is made.

Stella Creasy: I am pleased that the Minister has finally said that the information is required before the contract is made. Had she said so earlier, I would not have asked the question.
We will come back to whether that deals with the issue around ticket touting, because the Minister also seems to think that providing the information would be somehow restrictive on traders. We need a little more clarity. The question of ticket touting is key for us, because it is a great example of consumer detriment. The Minister has not identified what would happen if the information were false. Is that an issue in the trading laws? Will the regulations deal with the secondary ticketing sites and the ways in which they are selling tickets? I will not press amendment 8, but we reserve the right to come back to the issue on Report.
We will also come back to the point of sale information, because it makes no sense to Opposition Members to wait until people have been ripped off before giving them information about how to exercise their rights. [Interruption.] I see nodding and agreement from Committee members. I am pretty sure that there will be support widely in the House for that as well.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11 ordered to stand part of the Bill.

Clauses12 to 16 ordered to stand part of the Bill.

Clause 17  - Trader to have right to supply the goods etc

Stella Creasy: I beg to move amendment 9, in clause17,page8,line20,at end insert—
‘(1A) Prior to sale the trader must disclose any—
(a) outstanding claims to the goods, or
(b) legal charges against the goods,
which is the subject of the contract and which may—
(i) affect the consumer’s future enjoyment or use of the goods, or
(ii) cause financial detriment to the consumer.’.
It seems that the good will of the Committee is being tested yet again by the behaviour of the Government.
The amendment is relevant to the second half of the discussion we had this morning on log book loans. It tries to deal with the second half of the challenge that we all identified, which is that individuals might unknowingly buy a vehicle with a charge against it. Not knowing, necessarily, that a charge applies to the vehicle, they could discover that bailiffs are at the door seeking to recover the good and, because a bill of sale agreement has been applied, they would then have their cars taken away.
One in four cars in this country is sold in this way. It is a real concern that the issue of information on whether a debt is outstanding on a vehicle has not been identified. We therefore think it is right to amend the Bill to offer consumers protection from that sort of charge. Amendment 9 would ensure that consumers who buy a second-hand car are given that information prior to the sale. Someone could choose to continue to buy a car knowing that there is a debt outstanding on it, perhaps because it is a particular specialist car. I have dreams of one day trying to drive a Rolls-Royce. However, if I see a Rolls-Royce and there is a charge outstanding on it, surely I should know that prior to sale, so I am aware that it may incur an additional debt. For example, I may wish to pay off the charge so I can secure the log book myself.
Because the Government have failed to act on bill of sale legislation and have shown today that they have absolutely no interest in the rights of consumers in that arena, there is clearly a problem for both the person originally taking out a loan and securing it against a car, and the person who might unknowingly buy a car with that attached to it. As we tried to set out this morning when the Minister seemed not to understand the ways in which bill of sale provisions work, it is because it says that you can repossess a good without having to go to court that the problem arises. Someone might have bought a car but would not actually have full ownership under a bill of sale agreement. This amendment tries to close that loophole from the perspective of the person who might buy a property, rather than necessarily the person who would have taken out the loan.
We do not think it is unfair to ask that a person who has bought a property should know its full history by default. Therefore, if someone trades such a good, they have a responsibility to let the person know the details of the property that they are purchasing. With that in mind, we have tabled this amendment, to try to get to the bottom of how we protect consumers who might have unknowingly bought a car with such a charge. I am certainly aware in my constituency of people who have had cars repossessed that they did not know had such charges against them, and were devastated to lose such property.

Andrew McDonald: Will the Bill not leave open the possibility of people thinking they are acquiring a vehicle that is their entire property? Not only that, the money they spent in acquiring the goods is money down the drain. They may also have spent additional funds on that vehicle to repair or enhance it in some way. It just compounds the problem if we do not arrest this development now.

Stella Creasy: It is absolutely devastating for individuals to have bought a car in good faith—they may have saved up substantially to buy a car second-hand, only to have it taken away. Due to the Government’s behaviour this morning in failing to deal with bill of sale agreements, it means that this can continue. The only redress that the Minister seems to think they might have is under unfair contract terms. That is too late when the car is gone.
We could have made progress this morning to bring these bill of sale agreements under modern consumer protection laws, so that there is a right to challenge before the good is taken away. That right has been denied. I know that Government Members are not unsympathetic to the idea that it is deeply unfair to buy a car and have it taken away for a charge that someone did not know of. It goes against natural justice. The only thing we can do now is table an amendment like this to try to deal with these sorts of problems. I hope that hon. Members will recognise that this is about fairness on all sides of the equation—something that the Minister seemed to be in short supply of today. I hope that other hon. Members will recognise that there is value in accepting those proposals and will act accordingly.

Ordered, That the debate be now adjourned. (Mr Gyimah).

Adjourned till Tuesday 25 February at five minutes to Nine o’clock.